In the first two parts of this series we touched on the different types of commission-free ETF trading being offered by discount brokerages and provided several tips for investors to keep in mind when considering these types of offers. (Click here to read part one or here to read part two)

In part three of this series, we compare the three providers currently offering commission-free buying and selling of ETFs (Qtrade, Scotia iTrade and Virtual Brokers) and look in detail at the offers from Qtrade and Scotia iTrade.

In the next part of this series, we will look at the offers from Virtual Brokers and Questrade in detail as well as the lessons learned from researching commission-free ETF offers at discount brokerages.

Comparing Commission-Free ETF Trading Offers

Even though Qtrade, Scotia iTrade and Virtual Brokers have limits on which ETFs are eligible to be bought and sold commission-free, the pool of ETFs offered by each brokerage is still sizeable with 60, 50 and 100 ETFs being offered respectively.

Between these three discount brokerages, there are 132 unique ETFs being offered by 17 different ETF providers. Interestingly, all three discount brokerages offer 30 of the same ETFs commission-free. For investors this means that a discount brokerage’s fee structure may be more of a factor to consider than which ETFs they offer.

Despite there being 17 different ETF providers, most of the funds come from only a handful of companies. In fact, four ETF providers contribute 78% of the commission-free ETFs available at Canadian discount brokerages with BlackRock alone offering slightly less than 50% of all the commission-free ETFs.  Horizons, BMO and Vanguard respectively make up the rest of the top four commission-free ETF providers.

We’ll now take a look at the offers from Qtrade and Scotia iTrade in detail. In the next part of this series we’ll look at Virtual Brokers’ offers in detail as well as Questrade’s offer and conclude with important lessons learned from researching commission-free ETFs.

 Commission-Free ETF Trading at Qtrade

At Qtrade, ETFs from the following five providers are included as part of the 60 commission-free ETF pool:

1. Blackrock Asset Management (iShares)
2. Horizons ETFs Management Canada (Horizons)
3. Invesco Canada (PowerShares)
4. State Street Global Advisors (SPDRS)
5. Vanguard Investments Canada (Vanguard)

The majority (40) of the commission-free ETFs being offered are from Blackrock (iShares) with Horizons ETFs and Vanguard each offering 8 and Powershares and State Street offering two each.  Collectively these ETFs represent diverse sectors, asset classes and geographic regions that investors can choose from.

There are 26 ETFs eligible for commission-free trading at Qtrade that are not offered commission-free at Scotia iTrade or Virtual Brokers. Of these, one of the lowest cost group of funds that Qtrade has compared to either Scotia iTrade and Virtual Brokers is from Vanguard.  While largely sector-based, the 8 funds do have a fee structure far lower than that of some comparable funds. For the list of funds eligible for commission-free trading at Qtrade click here.

The table below shows the range of management fees of Qtrade’s commission-free ETFs.  Blackrock and Horizons have wide ranges of management fees whereas the management fees for Vanguard’s ETFs are lower (and are consistently priced) on average.

	Number of ETFs	Management Fee Range
Blackrock Asset Management (iShares)	40	0.15-0.98
Horizons ETFs Management Canada (Horizons)	8	0.07-0.75
Invesco Canada (PowerShares)	2	0.25-0.5
State Street Global Advisors (SPDRS)	2	0.5
Vanguard Investments Canada (Vanguard)	8	0.14*
*Where a management fee was reported, this number is provided otherwise the Management Expense Ratio is provided	#colspan#	#colspan#

In terms of the ‘fine print’ in order for an ETF trade to be eligible for commission-free status it must meet the following criteria:

1. The minimum order value of $1000 in the currency of the ETF
2. Clients must hold the ETF for a minimum of 1 business day from the date of purchase
3. Clients must have signed up for eDocuments (for both statements and trade confirmations)

The minimum order value is a restriction that neither Scotia iTrade nor Virtual Brokers have in place. In addition mandatory sign up for eDocuments is a feature that is also unique to Qtrade in order to qualify for commission-free ETF trading. For the full list of eligibility criteria for commission-free ETF trading at Qtrade, click here.

Commission-Free ETFs at Scotia iTrade

As mentioned earlier, Scotia iTrade’s commission-free ETF list contains 50 funds investors can choose from, 30 of which are also offered by Qtrade and Virtual Brokers.  In fact, there are actually only 7 ETFs that Scotia iTrade offers commission-free that aren’t offered commission-free by one of their competitors. One interesting feature of the Scotia iTrade group of commission-free ETFs is that 4 of them are currency hedged to Canadian dollars.

As the table below shows, Scotia iTrade only offers funds from four ETF providers compared to 5 at Qtrade and 18 at Virtual Brokers. The concentration of providers is clearly skewed towards the iShares line of ETFs with Horizons funds contributing the next biggest portion of ETFs.

	Number of ETFs	Management Fee Range
Blackrock Asset Management (iShares)	39	0.15-0.98
Horizons ETFs Management Canada (Horizons)	7	0.07-0.95
Invesco Canada (PowerShares)	2	0.32-0.9
Vanguard Investments Canada (Vanguard)	2	0.4-0.43*
*Where a management fee was reported, this number is provided otherwise the Management Expense Ratio is provided	#colspan#	#colspan#

The ‘fine print’ on the commission-free offer from Scotia iTrade has the following important requirements:

1. Trades must be placed online or via their Tele-Trader
2. ETFs must be held for at least 1 business day

Conspicuously absent from the requirements is a minimum purchase amount, which is positive for anyone looking to purchase small amounts of particular funds at any one time.  There is a note for users of the pro platform that commissions will be charged for orders placed through the platform and later refunded back to the user.  For the full list of eligibility criteria for commission-free ETF trading at Scotia iTrade, click here.

In the final part of this series, the plans from Virtual Brokers and Questrade will be looked at in detail and we’ll wrap up with the lessons learned from researching the various commission-free ETF offers.