The investment industry’s initial reaction to exchange-traded funds was a mix of dumbfoundment and fury.
ETFs empowered individual investors to build and manage well-diversified portfolios at a much lower cost than the then-ascendent mutual fund industrial complex offered. A variety of arguments were deployed against ETFs, notably that investors would trade too much and be dragged down when their index-tracking funds exposed them fully to market declines.
These arguments proved groundless, but there is one ETF critique that has stuck around. The cost of buying and selling ETFs at some online brokers is as high as $9.99 a shot. If you invest regularly and rebalance periodically, these costs can be a notable drag on performance.
Fortunately, ETF trading costs are increasingly easy to avoid as a result of a fresh wave of fee competition in the digital investing business.
Four digital brokers now offer zero-commission trading of stocks and ETFs - Desjardins Online Brokerage, National Bank Direct Brokerage, Questrade and Wealthsimple. CI Direct Trading offers no-cost ETF purchases, but regular commissions apply to sell transactions. CI’s commission of 1 cent per share with a minimum of $1.99 is pretty reasonable.
Other brokers have taken the approach of creating a list of 100-plus ETFs that clients can trade at no cost. With 1,500 ETFs listed for trading in the Canadian market, these limited menus can seem restrictive. But they do offer a good selection of core ETFs and may help keep investors from making flaky choices.
A full account of free ETF trading can be found in the 2025 Globe and Mail Digital Broker Ranking. Some highlights: BMO InvestorLine offers 108 commission-free ETFs, Qtrade Direct Investing offers 140 or more and Scotia iTrade offers 120 or more.
One more option for free ETF trading is the TD Easy Trade app. You get unlimited buying and selling of ETFs in the TD family, but other ETFs are unavailable.
Small accounts were where zero-cost ETF trading is most urgent. If you pay $9.99 to make monthly purchases of three ETFs for a year, the total cost of $359.64 works out to an aggregate cost of 0.72 per cent on a $50,000 portfolio. There’s no need to pay that cost any more.