Brokers With Lowest ETF Commissions
For investors who primarily trade Exchange Traded Funds (ETF), there are several brokers that offer the lowest commissions on this type of investment. The attraction of ETFs is that one can select an ETF that represents a stock index such as the S&P 500, commodities such as gold or sliver, and even a stock sector like biotech. It saves the investor from having to select a specific stock and minimizes the company risk associated with single stock investments. The ETF world has grown considerably, and there are now selections that multiply returns (and losses) by 100-200%.
Since some traders like to use ETFs for shorter time frames, commissions may become an important factor when selecting a broker. The lowest ETF commissions are offered at OptionsHouse, TradeKing and TradeMonster. An examination of these brokers’ commissions and services reveals a few differences to consider.
The commission at OptionsHouse is $4.75 per trade, even if a broker assists with the trade. That is a nice feature, where some large brokers may charge up to $40 to include a broker in the trade. This combined with no maintenance or inactivity fees makes this discounter an attractive choice. One is limited in the areas of research and education, but that may be a low priority for ETF investors. There is an additional fee $0.005 per share for trading a vehicle under $2, but most ETFs are above that threshold so it would not apply.
TradeKing’s ETF commission is $4.95 per trade, with an additional fee of $0.01 per share if the share price is less than $2. They do charge an inactivity fee of $50, but don’t have account minimums or maintenance fees. TradeKing offers excellent trading tools, educational resources and online community, so a trader does receive a bit more for their commissions spent on trading.
Completing an ETF trade at TradeMonster costs a similar $4.95, with a minimal $0.0005 per share on ETFs less than a dollar. This fee would almost never come into play with most ETFs. However, they do have an extra fee for trading after hours of 1.5 cents per share, which the others do not charge. Also, there are no account inactivity or maintenance fees.
As with most broker choices, ETF traders will have to make a selection based more on the services offered by each, rather than significant differences in commissions. For all three brokers, trades placed during normal hours for ETFs over $2 will all carry a similar commission cost.
This article was updated on 5/1/2014.