Where You'll Find Commission-Free ETFs

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Exchange-traded funds have burst onto the investing scene with a vengeance. They've made it easier than ever to put together a portfolio that's perfectly balanced to meet your investment goals. And even better, many brokers and ETF providers have teamed up to offer commission-free ETFs for their customers.

But when with so many brokers jumping onto the free-ETF bandwagon, it can be hard to figure out where you'll find your favorite ETF. So to make things a little easier, you'll find below a cheat sheet to identify the most popular commission-free ETF programs available.

Charles Schwab (NYSE: SCHW  )
Schwab was the first broker to offer commission-free ETFs, and over the past two years, the company has broadened its lineup of proprietary ETFs. Now, you can buy 14 Schwab ETFs that cover U.S. and international stocks as well as bond funds tracking U.S. Treasuries and the Aggregate Bond index. They also come with rock-bottom expense ratios that compare favorably with most ETF providers and rival or even beat Vanguard's notoriously low costs.

Fidelity was the first broker to go beyond proprietary ETFs to offer an outside lineup of funds. Partnering up with iShares, the top ETF provider by assets under management, Fidelity offers 30 iShares ETFs covering a range of asset classes, including the popular iShares DJ Select Dividend (NYSE: DVY  ) , iShares Barclays TIPS Bond (NYSE: TIP  ) , and iShares JPMorgan USD Emerging Markets Bond (NYSE: EMB  ) .

Vanguard went the proprietary route with its extensive ETF family, which has many more choices than Schwab. With broad-market funds covering U.S. and international stocks to dividend ETFs like Vanguard Dividend Appreciation (NYSE: VIG  ) and Vanguard High Dividend Yield (NYSE: VYM  ) , Vanguard offers low-cost alternatives that can appeal to many investors.

This discount broker chose its own path by creating a multi-family selection of more than 100 ETFs, taking the best of the best from several fund providers, including Vanguard, iShares, and the SPDR line of ETFs, among others. By choosing not to focus on any one ETF provider, TD AMERITRADE gives its customers the ultimate a la carte menu of ETFs.

Scottrade came into the free-ETF realm somewhat late to the game, but it made a powerful partnership with fund research giant Morningstar to offer 15 Focus Morningstar ETFs. For now, the ETFs are limited to broad-market and sector-specific domestic stocks, but their rock-bottom fees challenge other low-cost providers.

Interactive Brokers
This low-cost discount broker caters to active traders, and its commission-free ETFs reflect that. Its partnership with FactorShares to offer its long-short ETFs is tailored to investors who want to take two positions simultaneously. In addition, it also offers Global X ETFs that cover everything from silver miners to Colombian stocks.

The strategy that Firstrade chose for its ETFs was simple: Choose a small number of very valuable funds. The result was a menu of 10 free ETFs from iShares, Vanguard, and PowerShares that include stock, bond, and commodity ETFs. You don't have the same selection that you get from TD AMERITRADE, but you do have a wide enough selection to put together a reasonable asset allocation for your portfolio.

Making the right choice
Given the speed with which brokers have added commission-free ETF offerings, it's entirely possible that I've missed some. But what's clear is that investors have a huge range of brokers to choose from if they want to cut costs on their ETF investing. That can be extremely valuable, especially for those who like to add to their ETF positions regularly as they save small portions from each paycheck.

Choosing a broker is about much more than simply finding the right slate of commission-free ETFs. In many cases, you may well be happier paying a small commission with a broker that gives you the other services you want rather than using a commission-free ETF broker that doesn't match up with your overall investing needs. But in your quest for a perfect brokerage company, free ETFs certainly play an increasingly valuable role.

If you're passionate about ETFs, you'll want to read the Motley Fool's free special report on ETFs. You'll get three great ETF ideas along with useful commentary and much more.

Fool contributor Dan Caplinger is happy with his broker. You can follow him on Twitter here. He owns shares of Vanguard Dividend Appreciation ETF. The Motley Fool owns shares of Interactive Brokers. Motley Fool newsletter services have recommended buying shares of Schwab and Interactive Brokers. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy is free and will stay free.

Read/Post Comments (0) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1560630, ~/Articles/ArticleHandler.aspx, 10/26/2016 12:16:28 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 3 hours ago Sponsored by:
DOW 18,169.27 -53.76 -0.30%
S&P 500 2,143.16 -8.17 -0.38%
NASD 5,283.40 -26.43 -0.50%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/25/2016 4:00 PM
AMTD $34.32 Down -1.14 -3.21%
TD Ameritrade CAPS Rating: *****
DVY $83.84 Up +0.11 +0.13%
iShares Dow Jones… CAPS Rating: *****
EMB $116.52 Up +0.05 +0.04%
iShares JPMorgan U… CAPS Rating: **
SCHW $31.71 Down -0.48 -1.49%
Charles Schwab CAPS Rating: ****
TIP $116.13 Up +0.18 +0.16%
iShares Barclays T… CAPS Rating: *
VIG $82.55 Down -0.18 -0.22%
Vanguard Dividend… CAPS Rating: ****
VYM $71.23 Down +0.00 +0.00%
Vanguard High Divi… CAPS Rating: *****