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 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 NameSymbolExpense RatioAverage Daily Volume
Schwab U.S. Broad MarketSCHB0.08%192k
Schwab U.S. Large-CapSCHX0.08%150k
Schwab Short Term U.S. TreasurySCHO0.12%17k
Schwab Intermediate Term U.S. TreasurySCHR0.12%36k
Schwab U.S. TIPSSCHP0.14%20k
Schwab U.S. Large-Cap GrowthSCHG0.15%74k
Schwab U.S. Large-Cap ValueSCHV0.15%41k
Schwab U.S. Small-CapSCHA0.15%131k
Schwab International EquitySCHF0.15%154k
Schwab International Small-Cap EquitySCHC0.35%56k
Schwab Emerging Markets EquitySCHE0.35%117k


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 NameSymbolExpense RatioAverage Daily Volume
Russell 1000 Growth IWF0.20%2.9m
Russell 1000IWB0.15%1.8m
Russell 1000 ValueIWD0.20%1.9m
Russell 2000 GrowthIWO0.25%2m
Russell 2000IWM0.24%58m
Russell 2000 ValueIWN0.33%1.6m
Russell 3000IWV0.21%615k
S&P 500 GrowthIVW0.18%1m
S&P 500 IVV0.09%4m
S&P 500 Value IVE0.18%445k
S&P Mid Cap 400 GrowthIJK0.25%167k
S&P Mid Cap 400IJH0.21%756k
S&P Mid Cap 400 ValueIJJ0.28%176k
S&P Small Cap 600 GrowthIJT0.25%161k
S&P Small Cap 600IJR0.20%1.5m
S&P Small Cap 600 ValueIJS0.25%149k

International Equity Index Funds:

Fund NameSymbolExpense RatioAverage Daily Volume
MSCI EAFE Small Cap SCZ0.40%258k
MSCI Emerging Markets EEM0.72%72m

Fixed Income Funds:

Fund NameSymbolExpense RatioAverage Daily Volume
Barclays Aggregate AGG0.24%680k
Barclays TIPS TIP0.20%1.1m
iBoxx $ Investment Grade Corporate LQD0.15%1m
JP Morgan USD Emerging Markets EMB0.60%151k
S&P National AMT-Free Municipal MUB0.25%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 NameSymbolExpense RatioAverage Daily Volume
iShares S&P Aggressive Allocation AOA0.49%18k
iShares S&P Conservative Allocation AOK0.44%15k
iShares S&P Moderate Allocation AOM0.45%21k
iShares S&P Growth Allocation AOR0.46%26k
iShares S&P MidCap 400 Index IJH0.22%935k
iShares S&P SmallCap 600 Index IJR0.20%1.2m
iShares S&P SmallCap 600 Value IJS0.25%110k
iShares S&P 500 Value Index IVE0.18%654k
iShares S&P 500 Index IVV0.09%2.8m
iShares Russell 1000 Index IWB0.15%863k
iShares Russell Microcap Index IWC0.71%197k
iShares Russell 1000 Value Index IWD0.20%2.1m
iShares Russell 100 Growth Index IWF0.20%2.6m
iShares Russell 2000 Value Index IWN0.41%1.7m
iShares Russell 200 Growth Index IWO0.25%1.7m
iShares Russell Midcap Growth Index IWP0.25%438k
iShares Russell Midcap Value Index IWS0.25%637k
iShares Russell 3000 Index IWV0.21%309k
Vanguard Mega Cap 300 Growth Index MGK0.13%46k
Vanguard Small Cap VB0.14%398k
Vanguard Small Cap Growth VBK0.14%253k
Vanguard Small Cap Value VBR0.14%158k
Vanguard Dividend Appreciation VIG0.23%795k
Vanguard Mid Cap VO0.14%208k
Vanguard Mid Cap Value VOE0.14%83k
Vanguard Mid Cap Growth VOT0.14%137k
Vanguard Total Stock Market VTI0.07%4.3m
Vanguard Value VTV0.14%395k
Vanguard Growth VUG0.14%376k
Vanguard Extended Market VXF0.13%141k
Vanguard High Dividend Yield VYM0.20%196k

Sector Funds:

Fund NameSymbolExpense RatioAverage Daily Volume
SPDR Dow Jones Global Real Estate RWO0.50%64k
DJ Wilshire REITRWR0.25%262k
Vanguard REITVNQ0.13%1.9m

Bond Funds:

Fund NameSymbolExpense RatioAverage Daily Volume
iShares Barclays Aggregate Bond AGG0.24%657k
Vanguard Intermediate Term Bond BIV0.12%112k
Vanguard Long Term Bond BLV0.12%33k
Vanguard Total Bond Market BND0.12%750k
Vanguard Short Term Bond BSV0.12%551k
SPDR Barclays Capital International Treasury Bond BWX0.50%114k
iShares Barclays Intermediate Credit Bond CIU0.20%202k
iShares Barclays 1-3 Year Credit Bond CSJ0.20%505k
Vanguard Extended Duration EDV0.14%22k
iShares Barclays Intermediate Govt / Credit Bond GVI0.20%27k
iPath Optimized Currenacy Carry (ETN) ICI0.65%5k
iShares Barclays 3-7 Year Treasury Bond IEI0.15%105k
Market Vectors Intermediate Municipal ITM0.24%68k
Barclays GEMS Index (ETN) JEM0.89%338
SPDR Barclays Capital High Yield Bond JNK0.40%2.8m
iShares Iboxx # Inv Grade Corporate Bond LQD0.15%895k
iShares Barclays MBS Bond MBB0.33%161k
iShares S&P National Municipal Bond MUB0.25%128k
PowerShares Emerging Markets Sovereign Debt PCY0.50%430k
SPDR Nvn Barclays Capital Short Term Muni SHM0.20%286k
iShares Barclays 1-3 Year Treasury Bond SHY0.15%945k
SPDR Nuveen Barclays Capital Municipal Bond TFI0.30%190k
iShares Barclays TIPS Bond TIP0.20%812k
iShares Barclays 20+ Year Treasury Bond TLT0.15%8.3m
Vanguard Intermediate Term Corporate Bond VCIT0.15%63k
Vanguard Long Term Corporate Bond VCLT0.15%9710
Vanguard Short Term Corporate Bond VCSH0.15%200k
Vanguard Intermediate Term Government Bond VGIT0.15%7144
Vanguard Long Term Government Bond VGLT0.15%4248
Vanguard Short Term Government Bond VGSH0.15%18k
Vanguard Mortgage Backed Securities VMBS0.15%8379
SPDR DB International Government Inflation Protected Bond WIP0.50%201k

International Funds:

Fund NameSymbolExpense RatioAverage Daily Volume
iShares MSCI All Country Asia ex Japan AAXJ0.73%524k
iShares MSCI ACWI ACWI0.35%445k
iShares MSCI BRIC BKF0.72%246k
iShares MSCI EAFE Growth EFG0.40%78k
iShares MSCI EAFE Value EFV0.40%113k
Wisdomtree Trust India Earnings EPI0.88%3m
iShares MSCI Australia EWA0.55%4.4m
iShares MSCI Canada EWC0.55%3.8m
iShares MSCI Germany EWG0.55%4.7m
iShares MSCI Italy EWI0.59%439k
iShares MSCI Japan EWJ0.56%52m
iShares MSCI Spain EWP0.56%444k
iShares MSCI France EWQ0.55%352k
iShares MSCI UK EWU0.55%2.2m
SPDR S&P Emerging Markets Small Cap EWX0.66%127k
iShares MSCI Brazil EWZ0.65%14m
SPDR Euro STOXX 50 FEZ0.29%40k
FTSE China 25 FXI0.73%16k
SPDR S&P Emerging Europe GUR0.59%118k
SPDR S&P China GXC0.59%89k
iShares S&P Latin America ILF0.50%1.6m
iShares S&P Global 100 Index IOO0.40%124k
Market Vectors Russia RSX0.62%4.7m
SPDR DJ International Real Estate RWX0.59%444k
iShares MSCI EAFE Small Cap SCZ0.40%310k
Vanguard MSCI EAFE VEA0.15%2m
Vanguard FTSE All World ex-US VEU0.25%916k
Vanguard MSCI Europe VGK0.16%1.2m
Vanguard FTSE All World ex US Small Cap VSS0.40%56k
Vanguard Total World Stock VT0.30%95k
Vanguard MSCI Emerging Markets VWO0.27%21m

Commodity Funds:

Fund NameSymbolExpense RatioAverage Daily Volume
PowerShares DB Commodity Index DBC0.85%2.7m
PowerShares DB Oil DBO0.75%773k
iPath Dow Jones - AIG Commodity Index  (ETN) DJP0.75%452k
PowerShares DB Commodity Long (ETN) DPU0.75%2706


Vanguard offers all 49 of their Vanguard ETFs commission free:

Stock Funds:

Fund NameSymbolExpense RatioAverage Daily Volume
Dividend Appreciation VIG0.23%661k
Extended Market VXF0.16%129k
Growth VUG0.12%417k
High Dividend Yield VYM0.18%147k
Large Cap VV0.12%205k
Mega Cap 300 MGC0.13%35k
Mega Cap 300 Growth MGK0.13%49k
Mega Cap 300 Value MGV0.13%51k
Mid Cap VO0.12%223k
Mid Cap Growth VOT0.12%134k
Mid Cap Value VOE0.12%80k
S&P 500 VOO0.06%291k
Small Cap VB0.17%410k
Small Cap Growth VBK0.12%239k
Small Cap Value VBR0.23%92k
Total Stock Market VTI0.07%1.9m
Value VTV0.12%419k

Bond Funds:

Fund NameSymbolExpense RatioAverage Daily Volume
Extended Duration Treasury EDV0.13%22k
Intermediate Term Bond BIV0.11%112k
Intermediate Term Corporate Bond VCIT0.15%63k
Intermediate Term Government Bond VGIT0.15%7144
Long Term Bond BLV0.11%33k
Long Term Corporate Bond VCLT0.15%9710
Long Term Government Bond VGLT0.15%4248
Mortgage Backed Securities VMBS0.15%8379
Short Term Bond BSV0.11%551k
Short Term Corporate Bond VCSH0.15%200k
Short Term Government Bond VGSH0.15%18k
Total Bond Market BND0.11%750k

Sector Specific Funds:

Fund NameSymbolExpense RatioAverage Daily Volume
Consumer Discretionary VCR0.24%50k
Consumer Staples VDC0.24%55k
Energy VDE0.24%247k
Financials VFH0.27%123k
Health Care VHT0.24%83k
Industrials VIS0.24%74k
Information Technology VGT0.24%180k
Materials VAW0.24%81k
REIT VNQ0.13%1.9m
Telecommunication Services VOX0.24%44k
Utilities VPU0.24%49k

International Funds:

Fund NameSymbolExpense RatioAverage Daily Volume
FTSE All World ex-US VEU0.22%916k
FTSE All World ex-US Small Cap VSS0.33%56k
Global ex-US Real Estate VNQI0.35%42k
MSCI Emerging Markets VWO0.22%21m
MSCI Europe VGK0.14%1.2m
MSCI Pacific VPL0.14%198k
Total International Stock VXUS0.20%53k
Total World Stock VT0.25%95k


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

Fund NameSymbolExpense RatioAverage Daily Volume
Focus Morningstar US Market FMU0.05%1717
Focus Morningstar Large CapFLG0.05%5218
Focus Morningstar Mid CapFMM0.12%200
Focus Morningstar Small CapFOS0.12%180
Focus Morningstar Basic MaterialsFBM0.19%4896
Focus Morningstar Communication ServicesFCQ0.19%1411
Focus Morningstar Consumer CyclicalFCL0.19%949
Focus Morningstar Consumer DefensiveFCD0.19%3027
Focus Morningstar EnergyFEG0.19%5443
Focus Morningstar Financial Services FFL0.19%3751
Focus Morningstar HealthcareFHC0.19%3849
Focus Morningstar IndustrialsFIL0.19%1646
Focus Morningstar Real EstateFRL0.12%3954
Focus Morningstar TechnologyFTQ0.19%2692
Focus Morningstar UtilitiesFUI0.19%2311


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

Fund NameSymbolExpense RatioAverage Daily Volume
Vanguard Long Term Bond BLV0.11%33k
Vanguard Intermediate Term Bond BIV0.11%112k
Vanguard Short Term Bond BSV0.11%551k
Vanguard Dividend Appreciation VIG0.23%661k
iShares S&P 500 IVV0.09%3m
iShares S&P MidCap 400 IJH0.22%1m
Vanguard Small Cap Growth VBK0.14%239k
Vanguard Emerging Markets VWO0.27%21m
iShares FTSE / Xinhua China 25 FXI0.73%16m
PowerShares DB Commodity DBC0.85%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.