Brokerage TD Ameritrade is now letting investors trade more than 100 exchange-traded funds sans commission.
ETFs – which function like tradable mutual funds – have grown popular in recent years. More-conventional ETFs are built like mutual funds, allowing investors to trade baskets of stocks – but there are also many ETFs targeted at people who want to invest in niche markets like base metals or commodities.
TD Ameritrade reports that, among retail investors and registered investment advisors alike, ETFs are looking more attractive. Since early 2007, the number of Ameritrade users who trade ETFs has risen by 44 percent – and 80 percent of RIAs now use them in their portfolios, up from just 5 percent a year ago.
The brokerage worked with Morningstar – the investment-products consultancy – to develop a list of more 100 ETFs that it thinks customers will be interested in, and it is offering those funds on a no-commission basis. Neither TD Ameritrade nor Morningstar receives an incentive when investors buy the no-commission ETFs.
TD Ameritrade CEO Fred Tomczyk called the ETF offering "an incredible opportunity to help educate long-term investors about ETFs and portfolio diversification."