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FYI: There’s a growing number of ETFs being offered commission-free across various platforms. But when it comes to picking the right ETF for a client, are advisors swayed by the appeal of commission-free ETFs? In other words, is that a key driver in advisor choice of one ETF over another in a given segment? Regards, Ted http://www.etf.com/sections/features-and-news/do-commission-free-etfs-sway-decisions?nopaging=1
A big advantage of commission free ETFs for advisors is that you can split up your trade into many smaller pieces so you have less market impact. Let's say an advisor wants to buy 10,000 shares. Instead of entering one order for 10,000 shares which will move the market, he can enter 50 trades of 200 shares each, spacing them out over time. Even for a larger account, saving 50 commissions is a sizable amount.
Do advisors ever really transact enough to move the market? Rarely should an advisor be making significant changes to clients' portfolios, if he/she is prudent.
JoJo26: Depends what you are trading. For very liquid ETFs like SPY, even fairly large trades would not move the market. But I know for some small ETFs, even a transaction of a few hundred shares can move the market.
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Depends what you are trading. For very liquid ETFs like SPY, even fairly large trades would not move the market. But I know for some small ETFs, even a transaction of a few hundred shares can move the market.