Commission Free ETFs

Updated Sunday, May 22, 2011

Exchange Traded Funds (ETFs) have been one of the fastest growing financial products of the last decade.  At the beginning of 2010 there were 857 U.S.-listed ETFs with $736 billion in assets.  ETFs have become very popular because they offer investors diversification and indexation that is often superior and at lower cost than similarly structured mutual funds.  Schwab and Fidelity were the first brokers to attract investors by offering commission free ETF trading on select funds.  Soon after, TD Ameritrade and Vanguard joined in by offering their own selection of commission free ETFs.  Scottrade and Firstrade are the latest brokers to offer their own selection of ETFs.  Let's take a look at the funds that each broker offers.

Schwab

Schwab features 11 Schwab branded ETFs.  These funds can be traded by Schwab account holders with no commission charges.  Descriptions of these funds are as follows.  Click on any fund name to get a detailed summary:

Fund Name	Symbol	Expense Ratio	Average Daily Volume
Schwab U.S. Broad Market	SCHB	0.08%	192k
Schwab U.S. Large-Cap	SCHX	0.08%	150k
Schwab Short Term U.S. Treasury	SCHO	0.12%	17k
Schwab Intermediate Term U.S. Treasury	SCHR	0.12%	36k
Schwab U.S. TIPS	SCHP	0.14%	20k
Schwab U.S. Large-Cap Growth	SCHG	0.15%	74k
Schwab U.S. Large-Cap Value	SCHV	0.15%	41k
Schwab U.S. Small-Cap	SCHA	0.15%	131k
Schwab International Equity	SCHF	0.15%	154k
Schwab International Small-Cap Equity	SCHC	0.35%	56k
Schwab Emerging Markets Equity	SCHE	0.35%	117k

Fidelity

In what was clearly a retaliatory move, Fidelity followed Schwab by offering free ETF trading on 25 iShares branded funds.  Let's take a look at the fund selection:

US Equity Index Funds:

Fund Name	Symbol	Expense Ratio	Average Daily Volume
Russell 1000 Growth	IWF	0.20%	2.9m
Russell 1000	IWB	0.15%	1.8m
Russell 1000 Value	IWD	0.20%	1.9m
Russell 2000 Growth	IWO	0.25%	2m
Russell 2000	IWM	0.24%	58m
Russell 2000 Value	IWN	0.33%	1.6m
Russell 3000	IWV	0.21%	615k
S&P 500 Growth	IVW	0.18%	1m
S&P 500	IVV	0.09%	4m
S&P 500 Value	IVE	0.18%	445k
S&P Mid Cap 400 Growth	IJK	0.25%	167k
S&P Mid Cap 400	IJH	0.21%	756k
S&P Mid Cap 400 Value	IJJ	0.28%	176k
S&P Small Cap 600 Growth	IJT	0.25%	161k
S&P Small Cap 600	IJR	0.20%	1.5m
S&P Small Cap 600 Value	IJS	0.25%	149k

International Equity Index Funds:

Fund Name	Symbol	Expense Ratio	Average Daily Volume
MSCI ACWI	ACWI	0.35%	250k
MSCI EAFE	EFA	0.35%	19m
MSCI EAFE Small Cap	SCZ	0.40%	258k
MSCI Emerging Markets	EEM	0.72%	72m

Fixed Income Funds:

Fund Name	Symbol	Expense Ratio	Average Daily Volume
Barclays Aggregate	AGG	0.24%	680k
Barclays TIPS	TIP	0.20%	1.1m
iBoxx $ Investment Grade Corporate	LQD	0.15%	1m
JP Morgan USD Emerging Markets	EMB	0.60%	151k
S&P National AMT-Free Municipal	MUB	0.25%	93k

TD Ameritrade

Refusing to be outdone, TD Ameritrade has topped all competitors by offering a massive 101 commission free ETFs.  The list is mainly comprised of iShares, Vanguard, SPDR and PowerShares funds.  Note that all funds must be held for at least 30 days, otherwise a short term trading fee will apply:

US Equity Funds:

Fund Name	Symbol	Expense Ratio	Average Daily Volume
iShares S&P Aggressive Allocation	AOA	0.49%	18k
iShares S&P Conservative Allocation	AOK	0.44%	15k
iShares S&P Moderate Allocation	AOM	0.45%	21k
iShares S&P Growth Allocation	AOR	0.46%	26k
iShares S&P MidCap 400 Index	IJH	0.22%	935k
iShares S&P SmallCap 600 Index	IJR	0.20%	1.2m
iShares S&P SmallCap 600 Value	IJS	0.25%	110k
iShares S&P 500 Value Index	IVE	0.18%	654k
iShares S&P 500 Index	IVV	0.09%	2.8m
iShares Russell 1000 Index	IWB	0.15%	863k
iShares Russell Microcap Index	IWC	0.71%	197k
iShares Russell 1000 Value Index	IWD	0.20%	2.1m
iShares Russell 100 Growth Index	IWF	0.20%	2.6m
iShares Russell 2000 Value Index	IWN	0.41%	1.7m
iShares Russell 200 Growth Index	IWO	0.25%	1.7m
iShares Russell Midcap Growth Index	IWP	0.25%	438k
iShares Russell Midcap Value Index	IWS	0.25%	637k
iShares Russell 3000 Index	IWV	0.21%	309k
Vanguard Mega Cap 300 Growth Index	MGK	0.13%	46k
Vanguard Small Cap	VB	0.14%	398k
Vanguard Small Cap Growth	VBK	0.14%	253k
Vanguard Small Cap Value	VBR	0.14%	158k
Vanguard Dividend Appreciation	VIG	0.23%	795k
Vanguard Mid Cap	VO	0.14%	208k
Vanguard Mid Cap Value	VOE	0.14%	83k
Vanguard Mid Cap Growth	VOT	0.14%	137k
Vanguard Total Stock Market	VTI	0.07%	4.3m
Vanguard Value	VTV	0.14%	395k
Vanguard Growth	VUG	0.14%	376k
Vanguard Extended Market	VXF	0.13%	141k
Vanguard High Dividend Yield	VYM	0.20%	196k

Sector Funds:

Fund Name	Symbol	Expense Ratio	Average Daily Volume
SPDR Dow Jones Global Real Estate	RWO	0.50%	64k
DJ Wilshire REIT	RWR	0.25%	262k
Vanguard REIT	VNQ	0.13%	1.9m

Bond Funds:

Fund Name	Symbol	Expense Ratio	Average Daily Volume
iShares Barclays Aggregate Bond	AGG	0.24%	657k
Vanguard Intermediate Term Bond	BIV	0.12%	112k
Vanguard Long Term Bond	BLV	0.12%	33k
Vanguard Total Bond Market	BND	0.12%	750k
Vanguard Short Term Bond	BSV	0.12%	551k
SPDR Barclays Capital International Treasury Bond	BWX	0.50%	114k
iShares Barclays Intermediate Credit Bond	CIU	0.20%	202k
iShares Barclays 1-3 Year Credit Bond	CSJ	0.20%	505k
Vanguard Extended Duration	EDV	0.14%	22k
iShares Barclays Intermediate Govt / Credit Bond	GVI	0.20%	27k
iPath Optimized Currenacy Carry (ETN)	ICI	0.65%	5k
iShares Barclays 3-7 Year Treasury Bond	IEI	0.15%	105k
Market Vectors Intermediate Municipal	ITM	0.24%	68k
Barclays GEMS Index (ETN)	JEM	0.89%	338
SPDR Barclays Capital High Yield Bond	JNK	0.40%	2.8m
iShares Iboxx # Inv Grade Corporate Bond	LQD	0.15%	895k
iShares Barclays MBS Bond	MBB	0.33%	161k
iShares S&P National Municipal Bond	MUB	0.25%	128k
PowerShares Emerging Markets Sovereign Debt	PCY	0.50%	430k
SPDR Nvn Barclays Capital Short Term Muni	SHM	0.20%	286k
iShares Barclays 1-3 Year Treasury Bond	SHY	0.15%	945k
SPDR Nuveen Barclays Capital Municipal Bond	TFI	0.30%	190k
iShares Barclays TIPS Bond	TIP	0.20%	812k
iShares Barclays 20+ Year Treasury Bond	TLT	0.15%	8.3m
Vanguard Intermediate Term Corporate Bond	VCIT	0.15%	63k
Vanguard Long Term Corporate Bond	VCLT	0.15%	9710
Vanguard Short Term Corporate Bond	VCSH	0.15%	200k
Vanguard Intermediate Term Government Bond	VGIT	0.15%	7144
Vanguard Long Term Government Bond	VGLT	0.15%	4248
Vanguard Short Term Government Bond	VGSH	0.15%	18k
Vanguard Mortgage Backed Securities	VMBS	0.15%	8379
SPDR DB International Government Inflation Protected Bond	WIP	0.50%	201k

International Funds:

Fund Name	Symbol	Expense Ratio	Average Daily Volume
iShares MSCI All Country Asia ex Japan	AAXJ	0.73%	524k
iShares MSCI ACWI	ACWI	0.35%	445k
iShares MSCI BRIC	BKF	0.72%	246k
iShares MSCI EAFE Growth	EFG	0.40%	78k
iShares MSCI EAFE Value	EFV	0.40%	113k
Wisdomtree Trust India Earnings	EPI	0.88%	3m
iShares MSCI Australia	EWA	0.55%	4.4m
iShares MSCI Canada	EWC	0.55%	3.8m
iShares MSCI Germany	EWG	0.55%	4.7m
iShares MSCI Italy	EWI	0.59%	439k
iShares MSCI Japan	EWJ	0.56%	52m
iShares MSCI Spain	EWP	0.56%	444k
iShares MSCI France	EWQ	0.55%	352k
iShares MSCI UK	EWU	0.55%	2.2m
SPDR S&P Emerging Markets Small Cap	EWX	0.66%	127k
iShares MSCI Brazil	EWZ	0.65%	14m
SPDR Euro STOXX 50	FEZ	0.29%	40k
FTSE China 25	FXI	0.73%	16k
SPDR S&P Emerging Europe	GUR	0.59%	118k
SPDR S&P China	GXC	0.59%	89k
iShares S&P Latin America	ILF	0.50%	1.6m
iShares S&P Global 100 Index	IOO	0.40%	124k
Market Vectors Russia	RSX	0.62%	4.7m
SPDR DJ International Real Estate	RWX	0.59%	444k
iShares MSCI EAFE Small Cap	SCZ	0.40%	310k
Vanguard MSCI EAFE	VEA	0.15%	2m
Vanguard FTSE All World ex-US	VEU	0.25%	916k
Vanguard MSCI Europe	VGK	0.16%	1.2m
Vanguard FTSE All World ex US Small Cap	VSS	0.40%	56k
Vanguard Total World Stock	VT	0.30%	95k
Vanguard MSCI Emerging Markets	VWO	0.27%	21m

Commodity Funds:

Fund Name	Symbol	Expense Ratio	Average Daily Volume
PowerShares DB Commodity Index	DBC	0.85%	2.7m
PowerShares DB Oil	DBO	0.75%	773k
iPath Dow Jones - AIG Commodity Index  (ETN)	DJP	0.75%	452k
PowerShares DB Commodity Long (ETN)	DPU	0.75%	2706

Vanguard

Vanguard offers all 49 of their Vanguard ETFs commission free:

Stock Funds:

Fund Name	Symbol	Expense Ratio	Average Daily Volume
Dividend Appreciation	VIG	0.23%	661k
Extended Market	VXF	0.16%	129k
Growth	VUG	0.12%	417k
High Dividend Yield	VYM	0.18%	147k
Large Cap	VV	0.12%	205k
Mega Cap 300	MGC	0.13%	35k
Mega Cap 300 Growth	MGK	0.13%	49k
Mega Cap 300 Value	MGV	0.13%	51k
Mid Cap	VO	0.12%	223k
Mid Cap Growth	VOT	0.12%	134k
Mid Cap Value	VOE	0.12%	80k
S&P 500	VOO	0.06%	291k
Small Cap	VB	0.17%	410k
Small Cap Growth	VBK	0.12%	239k
Small Cap Value	VBR	0.23%	92k
Total Stock Market	VTI	0.07%	1.9m
Value	VTV	0.12%	419k

Bond Funds:

Fund Name	Symbol	Expense Ratio	Average Daily Volume
Extended Duration Treasury	EDV	0.13%	22k
Intermediate Term Bond	BIV	0.11%	112k
Intermediate Term Corporate Bond	VCIT	0.15%	63k
Intermediate Term Government Bond	VGIT	0.15%	7144
Long Term Bond	BLV	0.11%	33k
Long Term Corporate Bond	VCLT	0.15%	9710
Long Term Government Bond	VGLT	0.15%	4248
Mortgage Backed Securities	VMBS	0.15%	8379
Short Term Bond	BSV	0.11%	551k
Short Term Corporate Bond	VCSH	0.15%	200k
Short Term Government Bond	VGSH	0.15%	18k
Total Bond Market	BND	0.11%	750k

Sector Specific Funds:

Fund Name	Symbol	Expense Ratio	Average Daily Volume
Consumer Discretionary	VCR	0.24%	50k
Consumer Staples	VDC	0.24%	55k
Energy	VDE	0.24%	247k
Financials	VFH	0.27%	123k
Health Care	VHT	0.24%	83k
Industrials	VIS	0.24%	74k
Information Technology	VGT	0.24%	180k
Materials	VAW	0.24%	81k
REIT	VNQ	0.13%	1.9m
Telecommunication Services	VOX	0.24%	44k
Utilities	VPU	0.24%	49k

International Funds:

Fund Name	Symbol	Expense Ratio	Average Daily Volume
FTSE All World ex-US	VEU	0.22%	916k
FTSE All World ex-US Small Cap	VSS	0.33%	56k
Global ex-US Real Estate	VNQI	0.35%	42k
MSCI EAFE	VEA	0.12%	2m
MSCI Emerging Markets	VWO	0.22%	21m
MSCI Europe	VGK	0.14%	1.2m
MSCI Pacific	VPL	0.14%	198k
Total International Stock	VXUS	0.20%	53k
Total World Stock	VT	0.25%	95k

Scottrade

In March, 2011 Scottrade began offering 15 commission free ETFs.  These ETFs are managed by FocusShares, a wholly owned subsidiary of Scottrade:

Fund Name	Symbol	Expense Ratio	Average Daily Volume
Focus Morningstar US Market	FMU	0.05%	1717
Focus Morningstar Large Cap	FLG	0.05%	5218
Focus Morningstar Mid Cap	FMM	0.12%	200
Focus Morningstar Small Cap	FOS	0.12%	180
Focus Morningstar Basic Materials	FBM	0.19%	4896
Focus Morningstar Communication Services	FCQ	0.19%	1411
Focus Morningstar Consumer Cyclical	FCL	0.19%	949
Focus Morningstar Consumer Defensive	FCD	0.19%	3027
Focus Morningstar Energy	FEG	0.19%	5443
Focus Morningstar Financial Services	FFL	0.19%	3751
Focus Morningstar Healthcare	FHC	0.19%	3849
Focus Morningstar Industrials	FIL	0.19%	1646
Focus Morningstar Real Estate	FRL	0.12%	3954
Focus Morningstar Technology	FTQ	0.19%	2692
Focus Morningstar Utilities	FUI	0.19%	2311

Firstrade

In April, 2011 Firstrade began offering 10 commission free ETFs.  There funds are mostly Vanguard and iShares branded funds:

Fund Name	Symbol	Expense Ratio	Average Daily Volume
Vanguard Long Term Bond	BLV	0.11%	33k
Vanguard Intermediate Term Bond	BIV	0.11%	112k
Vanguard Short Term Bond	BSV	0.11%	551k
Vanguard Dividend Appreciation	VIG	0.23%	661k
iShares S&P 500	IVV	0.09%	3m
iShares S&P MidCap 400	IJH	0.22%	1m
Vanguard Small Cap Growth	VBK	0.14%	239k
Vanguard Emerging Markets	VWO	0.27%	21m
iShares FTSE / Xinhua China 25	FXI	0.73%	16m
PowerShares DB Commodity	DBC	0.85%	2.7m

Final Analysis

It is good to see that both major and lesser known brokers are offering innovative products to their customers in the form of commission free ETFs.  With that said, now that there is a fair amount of competition in the space, we can afford to rate the offerings critically.

Certainly TD Ameritrade and Vanguard offer an extensive list of funds, be we rate both brokers poorly when it comes to stock / ETF trading.  Schwab has an average trading platform but their Schwab branded funds are not well known.  Likewise, Scottrade is a decent trading platform but offers their own funds, most of which suffer from extremely low trading volume.  Firstrade has a good stock trading platform and offers some very well known funds but only has 10 from which to choose.

So for now, none of the commission free ETF programs at any of the brokers stand out as the best choice for investors.