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TD Ameritrade's Expanded Commission-Free ETF Program
The "expanded ETF" sheet (first link) says that TDAmeritrade is tripling its commission-free ETFs from 100 to 296.
According to its current website (day before switchover), they offer 152 equity ETFs, 9 sector ETFs, 95 bond ETFs, 112 international ETFs, and 11 commodity ETFs commission free. Maybe my arithmetic is wrong, but that seems to total 379 ETFs. It seems that TDA is reducing the number of commission free ETFs by 20%.
Not to mention that 30 Vanguard ETFs are being dropped: BIV, BLV, BND, BSV, EDV, MGK, VB, VBK, VBR, VCIT, VCSH, VEA, VEU, VGIT, VGLT, VGSH, VIG, VMBS, VNQ, VO, VOE, VOT, VSS, VT, VTI, VTV, VUG, VWO, VXF, VYM. (Some iShare ETFs are being dropped as well, but many are being kept).
The current (old) page says that there are 83 commission-free iShare ETFs. The "expanded ETF" sheet shows 44 (if I counted correctly). For example, AGG is dropped.
In spot-checking, I haven't been able to find a fund in the new list that isn't in the old list. (I'm working off a downloaded pdf file dated Oct. 16, 2017.) That's not to say there aren't any new ETFs, just that a not-so-random sampling has turned up none.
The first link says that State Street switched indexes on existing ETFs (potential albeit small cap gains for existing shareholders), renamed the funds, and gave them new tickers. This happened on Oct 16th, before the TDA switch.
That explains why the new tickers (e.g. SPDM for THRK) already appeared on the old TDA list. The new list is effective today, Oct. 17.
You're getting hoodwinked into thinking that TDA did anything to bring down prices, at least based on the SPDR changes.
@MSF I would say a 0.03% expense ratio is a pretty good deal on the SPDR Portfolio Total Stock Market ETF (SPTM) and an 0.11% one on the emerging markets fund--SPDR Portfolio Emerging Markets ETF (SPEM)--is the lowest fee currently available I believe on an emerging markets ETF. Also, although no S&P 500 ETF is available, the SPDR Portfolio Large Cap ETF (SPLG) also has a 0.03% expense ratio and I bet it's pretty close to an S&P 500 fund in how it moves. What this really is is an end-run around Standard & Poor's and Russell, which State Street is no longer paying licensing fees to by creating its own indexes. What also is a little trickier is liquidity as these are smaller ETFs than Vanguard's, but then most investors on this board are not institutional investors who need a lot of liquidity. I would advise placing limit orders on these ETFs till they get bigger if bid-ask spreads are wide. But I don't think this is a bad deal on the face of it.
My issue isn't with the State Street changes, but with TDA promoting a new and improved, expanded list, when in fact it had nothing to do with the State Street improvements and dropped funds (not only Vanguard but iShares (what's the excuse there?).
It's the age old claim of "new and improved", where the changes are minimal and potentially harmful to existing customers. At $50 to sell existing ETF shares and possible taxable gains in the process, it could take years or decades for current customers to "benefit" from a drop of a few basis points.
@MSF I see your point, but it's $6.95 to sell an ETF outside the NTF platform, not $50, as shares are treated as stocks for commission purposes. Instead of selling, probably the best strategy would be to find a reasonable substitute in the new list to existing ETF positions and just add to your position with that ETF while holding onto the old one--an annoyance for record keeping admittedly, but you wouldn't have to realize any additional capital gains too soon. I agree there is a bit of marketing shenanigans here, but I also think there are some interesting new options on this list and it is true that costs have declined for a number of broad bread and butter index style SPDR ETFs such as total market, emerging, agg bond, small cap, etc that are now transaction free. I don't see it nearly as negatively as the Financial Buff does.
@MSF I see your point, but it's $6.95 to sell an ETF outside the NTF platform, not $50, as shares are treated as stocks for commission purposes. Instead of selling, probably the best strategy would be to find a reasonable substitute in the new list to existing ETF positions and just add to your position with that ETF while holding onto the old one--an annoyance for record keeping admittedly, but you wouldn't have to realize any additional capital gains too soon. I agree there is a bit of marketing shenanigans here, but I also think there are some interesting new options on this list and it is true that costs have declined for a number of broad bread and butter index style SPDR ETFs such as total market, emerging, agg bond, small cap, etc that are now transaction free. I don't see it nearly as negatively as the Financial Buff does.
Transfer your taxable assets to Robinhood and you're all set.
Full ACAT transfer from TDA costs $75 (though partial is free). Robinhood doesn't seem to have promotions to accept the new account.
It's easy to get free trades at various brokerages. It's harder getting assets out of an account. Even harder for tax-favored accounts (especially hard for HSA accounts); perhaps that's why you restricted your suggestion to taxable assets.
Full ACAT transfer from TDA costs $75 (though partial is free). Robinhood doesn't seem to have promotions to accept the new account.
It's easy to get free trades at various brokerages. It's harder getting assets out of an account. Even harder for tax-favored accounts (especially hard for HSA accounts); perhaps that's why you restricted your suggestion to taxable assets.
Robinhood will cover any fees charged by your old brokerage.
I know free ETF/stock trades sounds great at Robinhood, but I'm curious how many investors here value things like security and stability of their financial institutions. What I mean is sometimes when I look at these small upstart brokers, I wonder how likely they are to be hacked like Equifax and how stable their financial resources are if there was suddenly a run on the bank style type crisis like 2008. I'm not saying big brokers like TD and Schwab and Fidelity can't be hacked or experience such runs, but I do think they are better able to handle distress than maybe newer brokers can. And I also wonder how many online security people a broker like Robinhood can afford and whether running maybe on a more shoestring budget makes them more vulnerable to cyber attacks. I also sometimes wonder about things like credit quality at all brokers. For instance, I know that for a while E*Trade didn't have the best of credit ratings, although it has improved in recent years. The other issue is narrow breath of product and financial tools, but most investors seem cognizant of that when they sign up for Robinhood.
... for your individual taxable account. Then there's your joint account. Your UGMA account, etc. Not to mention that if you ever, ever opened an account with Robinhood before via ACAT, from TDA or anyone else, they won't pay for this transfer.
If one doesn't have experience with them, why would one jump to a relatively unknown (FWIW I was already aware of this brokerage) company just to "save" 75 bucks? As Lewis suggested, going with smaller companies may (or may not) carry risks and limitations that call for additional research.
Since you suggested Robinhood, perhaps you can help with some of that research by sharing any experiences you've had with them?
Up until now, I've never heard of Robinhood (Brokerage). As fine a name as my lawyer who works for Dewey, Cheatem and Howe in Harvard Square, Cambridge, Mass.
Robinhood’s smartphone application is the only way users can interface with their accounts. Thankfully, the app is very well done: it is responsive and intuitive, making it easy to navigate for even the newest smartphone users.
Well that won't work for me. I don't trust smartypants phones to do anything besides make and receive phone calls, messaging and tell me the weather report. I don't even like or trust searching for anything on the phone. Besides I can't read the dang information anyway. Fonts are too small. No way I'm accessing any financial services entity with all the security holes on smartypants phones. The internet is bad enough as it is.
Robinhood is amazing. Had no issues ever with it. Easy to sign-up, trade. Only negative I guess is you don't get something like an x-ray on TDA for asset allocation and things, but I'm not sitting there monitoring it every single second of the day. Let my money work for me.
Comments
Regards,
Ted
According to its current website (day before switchover), they offer 152 equity ETFs, 9 sector ETFs, 95 bond ETFs, 112 international ETFs, and 11 commodity ETFs commission free. Maybe my arithmetic is wrong, but that seems to total 379 ETFs. It seems that TDA is reducing the number of commission free ETFs by 20%.
Not to mention that 30 Vanguard ETFs are being dropped: BIV, BLV, BND, BSV, EDV, MGK, VB, VBK, VBR, VCIT, VCSH, VEA, VEU, VGIT, VGLT, VGSH, VIG, VMBS, VNQ, VO, VOE, VOT, VSS, VT, VTI, VTV, VUG, VWO, VXF, VYM. (Some iShare ETFs are being dropped as well, but many are being kept).
The current (old) page says that there are 83 commission-free iShare ETFs. The "expanded ETF" sheet shows 44 (if I counted correctly). For example, AGG is dropped.
In spot-checking, I haven't been able to find a fund in the new list that isn't in the old list. (I'm working off a downloaded pdf file dated Oct. 16, 2017.) That's not to say there aren't any new ETFs, just that a not-so-random sampling has turned up none.
etf.com/sections/features-and-news/state-street-debuts-low-cost-etfs?nopaging=1
And less:
https://google.com/search?source=hp&q=TD+Ameritrade+Drops+Vanguard+From+Revamped+Commission-Free+ETF+Lineup&oq=TD+Ameritrade+Drops+Vanguard+From+Revamped+Commission-Free+ETF+Lineup&gs_l=psy-ab.3...1115.1115.0.2819.2.1.0.0.0.0.102.102.0j1.1.0....0...1.1.64.psy-ab..1.0.0.0...0.mNwnILJ49qk
Some of the new/improved State Street ETFs on the TD platform actually have lower fees than Vanguard and iShares.
That explains why the new tickers (e.g. SPDM for THRK) already appeared on the old TDA list. The new list is effective today, Oct. 17.
You're getting hoodwinked into thinking that TDA did anything to bring down prices, at least based on the SPDR changes.
https://thefinancebuff.com/td-ameritrade-commission-free-etf-worse.html
It's the age old claim of "new and improved", where the changes are minimal and potentially harmful to existing customers. At $50 to sell existing ETF shares and possible taxable gains in the process, it could take years or decades for current customers to "benefit" from a drop of a few basis points.
It's easy to get free trades at various brokerages. It's harder getting assets out of an account. Even harder for tax-favored accounts (especially hard for HSA accounts); perhaps that's why you restricted your suggestion to taxable assets.
https://support.robinhood.com/hc/en-us/articles/115001535326-Stock-Transfer
If one doesn't have experience with them, why would one jump to a relatively unknown (FWIW I was already aware of this brokerage) company just to "save" 75 bucks? As Lewis suggested, going with smaller companies may (or may not) carry risks and limitations that call for additional research.
Since you suggested Robinhood, perhaps you can help with some of that research by sharing any experiences you've had with them?