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Comission Free ETFs

Commission Free ETFs War Heats Up With TD Ameritrade Deal

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Late last year Schwab began offering its own branded ETFs commission freewhich helped kick off an ETF commission war amongst other brokerages.  The four broad market ETF’s from Schwab have proven to be fairly successful with Schwab customers and are actually fairly liquid trading between 100 – 200K shares a day.  Fidelity eventually joined the ring by partnering with BlackRock to provide 25 iShares ETF’s at no charge and Vanguard upped the ante further in May of this year by offering up all of its ETFs commission free.

The commission free ETF war continues and that’s a great thing for investors.  TD Ameritrade has announced it will offer 100 commission free ETFsto its clients across iShares, SPDRs, Vanguard, Invesco, Barclays, WisdomTree and Deutsche Bank.  Where investors were previously limited to one provider, TD Ameritrade now offers an impressive smorgasbord for the budget minded ETF investor.  Are Etrade and Scottrade far behind?  Probably not if they want to continue to grow and adapt with the market.

“We want to help investors build long-term portfolios more cost effectively,” said TD Ameritrade CEO Fred Tomczyk. “We have a very popular no-transaction fee mutual fund offering, and as ETFs continue to grow in popularity and diversity, this was a natural progression for us. It’s an incredible opportunity to help educate long-term investors about ETFs and portfolio diversification.”

So what’s the catch?  Well, there is a small one.  TD Ameritrade eats the commission cost on these, so you’re required to hold the commission free ETF for at least 30 days or you’re charged $20.  With commission free trading on ETF’s expanding, the ETF universe may not only continue to eat into mutual fund investing, but single stock investing as well.  For many, there is now a viable option to improve your returns by completely eliminating the cost of the commissions.

Lithium ETF

Lithium ETF (LIT) Begins Trading

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Finally, an ETF for lithium has arrived and it may be the best way to play the electric car revolution in the coming years, not to mention the increasing demand for cell phones, portable computers and many other devices that rely on lithium batteries.  The Global X Lithium ETF (LIT) may prove to be a good diversified way to play the lithium boom with it spread fairly evenly across lithium miners and lithium battery makers.  Here’s a shot of the top holdings of the ETF:

lithium_etf_lit_holdings

You see the Chilean miner Sociedad Quimica (SQM) at about 20% of the fund which isn’t a surprise considering it’s the most well known lithium miner and largest worldwide producer.  Forbes once called Chile the Saudi Arabia of lithium and SQM is the leader there.  However, it should be noted that the three top holdings aren’t exactly lithium mining pure plays.  But you didn’t expect this ETF to be perfect did you?  Of course not!  No ETF is.  All in all, I’d say it’s a good mix of mining and battery plays across the globe.

The lithium ETF began trading July 23rd and moved up nearly 10% right out of the gates before pulling back a bit today.  It already has good liquidity and will likely remain popular considering it’s the only lithium ETF currently available.  Expect competition soon.