If you’re a Canadian investor considering tapping into the flourishing exchange-traded fund market, then you’re certain to have questions about which provider most fits your needs. Luckily, the following list takes the guesswork out of choosing your ETF broker. Here’s a quick overview of the major Canadian bank and non-bank brokerage houses currently trading in ETFs and a short summary of the pros, cons, and price structures of each provider.
TD Waterhouse
TD Waterhouse is the largest online brokerage firm in Canada. Although their fees are competitive, they’re not the cheapest of the bunch. If your household assets are more than $50,000, you’ll be charged a $9.99 flat-rate trading fee. If you make more than 150 trades a quarter, that fee will drop to $7 a trade. If you don’t trade frequently, or have less than $50,000 in household assets, you’ll have to pay more than $29 for trades of up to 1,000 shares.
One reason why TD Waterhouse is popular is that it has a ton of investment research information. It’s also got a nicely designed website that’s fairly easy to navigate.
BMO InvestorLine
There are a lot of good things to say about this popular bank brokerage firm. BMO InvestorLine’s got an attractive interface, easy-to-access research from Globe Investor, Morningstar, and MarketWatch, and two model ETF portfolios that will help newbie investors get off to a quick start. Its fees are similar to other firms, but it offers only two price points — $9.99 for the frequent trader or the person with a large account and $29 for everyone else.
InvestorLine has one feature that other brokerage houses don’t have: real-life advice. The service, called adviceDirect, gives Canadians stock and ETF picks and can answer investing-related questions on the phone, via e-mail, or through special tools on the website.
There is one catch, and — you can probably see where this is going — it’s fees. You have to have at least $100,000 in your account to use the service, and then you have to pay 1 percent of your assets’ worth to get access to that live advice. The percentage charged does go down with more money in your account, but be sure to keep costs in mind when using this program.
Scotia iTrade
Scotia iTrade has plenty of great tools and research to help you make money. The main advantage it has over its rivals is that it offers 50 free ETFs. Although that’s fantastic — American brokerages have been offering no-commission ETFs for years — it’s not quite as great as it may seem. The freebies are mostly old Claymore funds, which are now owned by iTrade. You can’t purchase stalwarts like XIC and XIU; most of the freebies are sector or country funds. You can buy the two popular iShares laddered bond funds, but most people won’t want to create a portfolio just out of these options.
If you want to buy something not on the list, then you’ll have to pay between $6.99 and $24.99 in trading fees.
RBC Direct Investing
This site from RBC is similar to the others. Its fees range from $6.95 to $28.95, and it’s partnered with Morningstar to offer stock, mutual fund, and ETF research. It also has several useful tools, including its Community tab, which allows Direct Investing clients to share ideas with one another.
CIBC Investor’s Edge
Much like the others, though CIBC Investor’s Edge is arguably not as good. It doesn’t offer U.S.-dollar registered accounts, and it lacks some of the tools that other brokerages have. Fees are comparable, ranging from $6.95 to $28.95.
Virtual Brokers
One of the non-bank brokerage firms, Virtual Brokers is a relative newcomer on the scene, launching in 2009. It was recently ranked the top brokerage firm in Canada by the Globe and Mail. Here’s the main reason to consider this site: All ETF purchases are free. Yes, you read that right. Any ETF you buy, Canadian or American, will cost you nothing.
You will pay a charge to sell, but it’s dirt cheap. You’re dinged $0.01 per share of anything that’s over $1. The minimum commission is $0.99, and the maximum is $9.99, well below what the banks charge.
Qtrade
It’s probably the most critically acclaimed non-bank brokerage of the bunch, and for good reason — Qtrade is user-friendly, it’s got great investment tools, and its fees are comparable, if not better than, the competitions’ (prices range from $9.95 to $19).
Best of all, it has 60 commission-free ETFs. Like iTrade’s freebie funds, most of the offerings are of the bond, sector, or international variety — the main domestic equity ETFs aren’t on the list — but it also offers 20 U.S.-based funds, such as the Vanguard Consumer Discretionary ETF and the SPDR S&P International Financial Sector ETF.
Questrade
The only broker than can beat Questrade’s cheap fees — stock commissions are between $4.95 and $9.95 — is . . . Questrade! In February 2013, the company announced that it would waive fees on every ETF purchased. It still charges its inexpensive commission on the sale of ETFs, but, like Virtual Brokers, every North America-listed fund will cost you nothing to buy. To top it off, Questrade also offers U.S.-dollar RRSPs, and there are no annual fees on registered accounts.
Other online brokers
Here are some additional online brokers you might want to check out:
Disnat: The online brokerage arm of Desjardins. Fees range from $9.95 to $29.
HSBC InvestDirect: Not much to write home about, other than its oddly numbered fees that range from $6.88 to $28.88.
National Bank Direct Brokerage: Similar to other bank brokerage firms on fees and features.
Credential Direct: Only one thing to note here: Investors with $50,000 or more in assets have to pay a $19 flat rate. Everyone else offers $9.99 or less.
