TD Ameritrade Changes Commission-Free ETFs

[smallstache]

"Dear Valued Client,

We're happy to announce that we are expanding our commission-free exchange-traded funds (ETFs) trading program, nearly tripling the number of available funds to 296. Since you’re currently enrolled in the commission-free ETF trading program, we want to be sure you have all the details so you can determine how these changes can meet your investing needs."

Blah, blah, blah.  Gone are all Vanguard ETFs from the list, as well as several other lower cost options, such as ITOT (.05% fee) which is replaced with SPTM (.1% fee).  There are even some real winners added to the list--a number of "market neutral" ETFs with fees of 3+%, 7+%, even 11+%.

[DarkandStormy]

So I mistakenly rolled my old 401(k) to TDA on a false assumption - I had called and was told I'd meet the min. required for the cash bonus, rolled it over, and then was told rollovers are not part of that promotion.

I picked some Vanguard ETFs (during the free commission intro period) and have let them ride since, but really just want to get everything out and roll it to Vanguard (yes, I'll have to eat the account closure fee).  Will this impact my decision at all?  I assume not since I'm not trading within the TDA account anymore.

[smallstache]

I only use TD Ameritrade for my kids' Coverdell Savings Plans.  I make one purchase a year when its time to make contributions.  It's the sales I am more concerned about.

Most brokers, including Vanguard, want to steer me towards higher-fee 529 plans, so they no longer offer Coverdells.

Can't win:(

[Car Jack]

I hold VTI at TDA and thought it was the best of both worlds.  One of the cheapest, bestest equity ETFs at one of the best brokerage houses at no cost.  I'll leave it there but I ain't adding a penny to that account and will withdraw any dividend money.

[RWD]

I guess the expense ratio for SPTM (SPDR Portfolio Total Stock Market ETF) is supposed to have just dropped to 0.03%:
http://www.etf.com/sections/features-and-news/state-street-debuts-low-cost-etfs

[Cork]

The TD Ameritrade email doesn't include any expense ratios for the new list of Commission free ETFs.

I guess the expense ratio for SPTM (SPDR Portfolio Total Stock Market ETF) is supposed to have just dropped to 0.03%:
http://www.etf.com/sections/features-and-news/state-street-debuts-low-cost-etfs

So, is SPTM looking to be the best replacement for the VTI?

[Tyler]

Yeah, that sucks that they're taking some major funds off of the commission-free list.  I never like to see that. 

FWIW, I invest at Fidelity and pay a $8 commission whenever I buy or sell VTI.  I personally don't consider it a big deal, as I intentionally trade so infrequently that the extra cost is negligible and is worth it to own a quality fund like VTI.  That said, Fidelity is really good about NOT charging that commission for reinvested dividends.  I can't speak for how TDA or other brokerages work in that regard, and I agree that would be a dealbreaker.

BTW, be really careful about kneejerking and switching funds in a taxable account just because they started charging a commission.  You may lose way more money in taxes than you save in fees.  It's ok to be upset, but don't let it cloud your judgment. 

[I'm a red panda]

TD Ameritrade is where my husband's HSA is invested.  It was all in Vanguard funds. 

We are needing to find some alternatives.

Commission free trades doesn't help us when the fees in the funds are so high.

[RWD]

I guess the expense ratio for SPTM (SPDR Portfolio Total Stock Market ETF) is supposed to have just dropped to 0.03%:
http://www.etf.com/sections/features-and-news/state-street-debuts-low-cost-etfs

So, is SPTM looking to be the best replacement for the VTI?

That's the sense I got from reading the /r/personalfinance discussion. But I haven't looked through all the options myself.

That said, Fidelity is really good about NOT charging that commission for reinvested dividends.  I can't speak for how TDA or other brokerages work in that regard, and I agree that would be a dealbreaker.

I have a TD Ameritrade account for my HSA. Dividends are not auto-reinvested (unless I'm missing an option or something). Before I enrolled in the commission-free ETF program (why isn't that the default?) buying more VTI with the proceeds of the dividends incurred a commission fee.

[Rural]

I'm also looking for a solution for my HSA now. I just got it rolled over there this summer, too.

[Herbert Derp]

I have a TD Ameritrade account for my HSA. Dividends are not auto-reinvested (unless I'm missing an option or something). Before I enrolled in the commission-free ETF program (why isn't that the default?) buying more VTI with the proceeds of the dividends incurred a commission fee.

This happened to me. I called them up on the phone and they reversed the commission fee for VTI.

[RWD]

That said, Fidelity is really good about NOT charging that commission for reinvested dividends.  I can't speak for how TDA or other brokerages work in that regard, and I agree that would be a dealbreaker.

I have a TD Ameritrade account for my HSA. Dividends are not auto-reinvested (unless I'm missing an option or something). Before I enrolled in the commission-free ETF program (why isn't that the default?) buying more VTI with the proceeds of the dividends incurred a commission fee.

You have to dig through the menus a bit to turn on DRIP.  I never had any issues with DRIP in HSA or standard brokerage with TD Ameritrade.

Thanks! I'll look into setting that up. Looks like it shouldn't have a fee either: "TD Ameritrade does not intend to charge a fee for transactions executed pursuant to the Program."

I have a TD Ameritrade account for my HSA. Dividends are not auto-reinvested (unless I'm missing an option or something). Before I enrolled in the commission-free ETF program (why isn't that the default?) buying more VTI with the proceeds of the dividends incurred a commission fee.

This happened to me. I called them up on the phone and they reversed the commission fee for VTI.

I was able to get the commission fees reversed as well.

[Helvegen]

I have my HSA there, so am mostly stuck because there are not a lot of great options.

Anyway, I switched out

VTI -> SPTM
BND -> SPAG
VEU -> SPDW
VSS -> No good replacement

Added

SPEM (Emerging Markets)

[BigHaus89]

Thanks everyone for the assessment. The new list had quite a lot of garbage to sort through and I haven't had the time to find the VTI equivalent.

[SpareChange]

I was a little surprised when I got the email yesterday, not that these things don't happen from time to time. Been happy with TDA for a few years now. HSA, IRA, and taxable are with them. Checking as well. VT is my one stock fund, and there does not seem to be an equivalent. I'd have to string three different funds together. I invest basically every two weeks on payday. I'll have to think about it.   

[Rural]

Looks like Vanguard is now recommending "ComputerHealthsavings" for HSAs with Vanguard funds: https://personal.vanguard.com/us/whatweoffer/overview/healthsavings


Anyone know anything about them?

[TomTX]

So I mistakenly rolled my old 401(k) to TDA on a false assumption - I had called and was told I'd meet the min. required for the cash bonus, rolled it over, and then was told rollovers are not part of that promotion.

I picked some Vanguard ETFs (during the free commission intro period) and have let them ride since, but really just want to get everything out and roll it to Vanguard (yes, I'll have to eat the account closure fee).  Will this impact my decision at all?  I assume not since I'm not trading within the TDA account anymore.

So, I recently moved everything to Merrill Edge. Partly because everything will be free (I'm just moving VTI over in-kind) but in large part to leverage the bonuses at Bank of America.

Most interesting to me was the 75% boost to credit card rewards for hitting the $100k tier.

So that card which gives me 2% at Grocery/Sam's/Costco, will start giving me 3.5% back at those places. Less interesting since I don't buy much gas is the 3% back on gas becomes 5.25% back on gas.

And since I transferred > $200k, Merrill is going to pay me $600 in a few months (Note: If you have this across multiple transferred accounts, they need to be manually linked for the bonus by the transfer rep after the transfer goes through. The automatic system only works per-account)

https://info.bankofamerica.com/preferred-rewards/

Be aware that there is a delay in getting qualified for the Preferred Rewards - it's based on a trailing 3 month average and only becomes available in the month AFTER you hit the minimum. So for my $200k transfer, it takes 9 days to hit the $20k average balance for the bottom tier of Preferred Rewards. And it doesn't actually work until the 3rd of the following month. So I'll hit it in October and be able to actually sign up for Preferred Rewards November 3rd. Upgrades to higher tiers are supposed to be automatic.

[powskier]

I've been with Ameritrade since before TD came on board. I have not received said email and just bought more VTI this morning commission free.

Did they change to just charge the usual $6.99 fro a trade or whatever it is or some other fee?

[elysianfields]

I've been with Ameritrade since before TD came on board. I have not received said email and just bought more VTI this morning commission free.

Did they change to just charge the usual $6.99 fro a trade or whatever it is or some other fee?

The commissions on VTI begin on November 21.

[elysianfields]

Looking at the expense ratios in my personal investment strategy, these changes will lower my investment costs:

IVV 0.04% -> SPLG 0.03%
VO 0.06% -> SPMD 0.05%
VB 0.06% -> SPSM 0.05%
VEA 0.07% -> SPDW 0.04%
VWO 0.14% -> SPEM 0.11%

ETA:

Even VTI's replacement, SPTM, has a lower expense ratio (0.03% vs. 0.04%).

YMMV.

[elysianfields]

In the interests of full disclosure, Harry Sit over at http://www.thefinancebuff.com has the following take:

https://thefinancebuff.com/td-ameritrade-commission-free-etf-worse.html

His complaints are echoed in this article:  http://www.etf.com/sections/features-and-news/state-street-debuts-low-cost-etfs?nopaging=1

By cutting fees on these ETFs, State Street clearly hopes to lure investors to its other product offerings. But the SPDR Portfolio ETFs will come with their own risks, says Rosenbluth.

"The SSGA [ETFs] have historically traded less frequently than the iShares and Vanguard alternative(s) and as such, investors could incur higher trading costs," he added. "Meanwhile, SSGA('s) replacement of Russell indices with its own proprietary index will likely result in its shareholders ending up with a slightly different portfolio."

[smallstache]

When I started this thread I was not aware of the lowered State Street fees.  TD Ameritrade has since updated the fees on its commission-free list.

I had noticed the thin volumes and higher spreads that the Financebuff article mentions, as well as the generally low ownership that goes along with them.  Also, several of the seemingly equivalent ETF are actually more concentrated than previous ones.  And, as I mentioned at the start of the thread, many funds are pure shit that I think were added just so TD Ameritrade could use the word "triple".

This move is not the end of the world as commissions are only $6, but it is annoying.  I'm not going to close accounts over the change, but I probably won't put new money in.

[ChpBstrd]

I have been using TD's DRIP plan with Vanguard funds for free for a while now. I like the idea of lower ETF fees, but dislike the idea of potentially not having a robust options market to hedge with. E.g. selling a call and buying a put a couple times a year to maintain a collar strategy. In fairness, the old Vanguard funds have fairly thin, short-duration markets. But the new funds I might consider have no markets! I wish SPY was on the list, but alas...

That said, it's fairly cheap to maintain a collar on our six accounts. Under $150 in commissions probably. I would need an extra incentive to spend many hours of hassle moving them all.

Someone start a new thread listing the best bonus offers!

[TomTX]

I've been with Ameritrade since before TD came on board. I have not received said email and just bought more VTI this morning commission free.

Heh, I was with them when it was Datek Online.

It was reasonable to specify "online" in those days ;)

[TomTX]

I have been using TD's DRIP plan with Vanguard funds for free for a while now. I like the idea of lower ETF fees, but dislike the idea of potentially not having a robust options market to hedge with. E.g. selling a call and buying a put a couple times a year to maintain a collar strategy. In fairness, the old Vanguard funds have fairly thin, short-duration markets. But the new funds I might consider have no markets! I wish SPY was on the list, but alas...

That said, it's fairly cheap to maintain a collar on our six accounts. Under $150 in commissions probably. I would need an extra incentive to spend many hours of hassle moving them all.

Someone start a new thread listing the best bonus offers!

Sure!

https://forum.mrmoneymustache.com/investor-alley/investment-account-signup-bonuses!/

[TomTX]

This move is not the end of the world as commissions are only $6, but it is annoying.  I'm not going to close accounts over the change, but I probably won't put new money in.

We like to purchase every 2 weeks in our taxable account and put the money to work right away so a $6 fee x 5 funds = additional 2% drag on our portfolio performance if we stick with the same Vanguard ETFs.  That is like a 2% AUM fee, in effect or I have to let money pile over the course of several pay periods.  I don't personally like that.

Rather than purchasing all 5 funds every 2 weeks, you could just rotate between them - different fund each fortnight.

If you want to get super-technical, put it into whichever is furthest below your planned AA.

[With This Herring]

*snip*
FWIW, I invest at Fidelity and pay a $8 commission whenever I buy or sell VTI.  I personally don't consider it a big deal, as I intentionally trade so infrequently that the extra cost is negligible and is worth it to own a quality fund like VTI.  That said, Fidelity is really good about NOT charging that commission for reinvested dividends.  I can't speak for how TDA or other brokerages work in that regard, and I agree that would be a dealbreaker.
*snip*

Possibly a dumb question:  Why are you using Fidelity to buy a Vanguard fund for $8 a pop when Fidelity has its own equivalent (FSTVX, I think?) with no commission?  Is it the fact that it is a Vanguard fund?

I'm not sure why you don't do Fidelity + Fidelity funds OR Vanguard + Vanguard funds.

Looks like Vanguard is now recommending "ComputerHealthsavings" for HSAs with Vanguard funds: https://personal.vanguard.com/us/whatweoffer/overview/healthsavings

Anyone know anything about them?

I don't, but thank you for the link!  I've been meaning to look at moving my (minimal) HSA funds for a while now.

[Tyler]

*snip*
FWIW, I invest at Fidelity and pay a $8 commission whenever I buy or sell VTI.  I personally don't consider it a big deal, as I intentionally trade so infrequently that the extra cost is negligible and is worth it to own a quality fund like VTI.  That said, Fidelity is really good about NOT charging that commission for reinvested dividends.  I can't speak for how TDA or other brokerages work in that regard, and I agree that would be a dealbreaker.
*snip*

Possibly a dumb question:  Why are you using Fidelity to buy a Vanguard fund for $8 a pop when Fidelity has its own equivalent (FSTVX, I think?) with no commission?  Is it the fact that it is a Vanguard fund?

I'm not sure why you don't do Fidelity + Fidelity funds OR Vanguard + Vanguard funds.

It's not a dumb question at all.  There are a few reasons.

First, I personally prefer ETFs over mutual funds and Fidelity's internal ETF selection is pretty thin (they have tons of mutual funds, though). Also, in my Fidelity account I intentionally spread my money between a few different fund providers (Vanguard, iShares, Schwab, etc) to minimize counter-party risk.  And finally, I like how VTI perfectly complements my other US stock fund VB because of the way they're structured internally.  Basically, the Fidelity version is a fine option but I have multiple goals that push me to not rely solely on Fidelity offerings.   And that's before you get to cases (like a physical gold index) where Fidelity and Vanguard don't offer a good fund option and the only choice is to look elsewhere.

BTW, many iShares funds are also commission-free at Fidelity and since my last post I also noticed that they recently lowered their commissions to $5 for all the rest. 

[Indexer]

Looks like Vanguard is now recommending "ComputerHealthsavings" for HSAs with Vanguard funds: https://personal.vanguard.com/us/whatweoffer/overview/healthsavings


Anyone know anything about them?

Uh... your comment and your link don't match.

The companies listed in the article are HealthSavingsAdministrators and HealthEquity. I personally have HealthEquity. They have Vanguard institutional plus funds. Expense ratios as low as 0.02%. :D

Edit: Oh I see what you did. If you copy paste Health Savings Administrators there is a computer icon next to Health Savings so when you paste it on MMM it comes up as "ComputerHealthSavings Administrators."

[Hargrove]

I don't get it. Why does anyone pay the transfer fee?

You have 100 shares of A and 100 shares of B. Do a free partial transfer for 100 shares of A and 99 shares of B.

Sell your 1 share of B.

Withdraw the proceeds for the sale of B.

Close the account.

I'm leaving the IRA with TD set on DRIP. Everything else is DRIP or moving to Vanguard.

[With This Herring]

*snip*
FWIW, I invest at Fidelity and pay a $8 commission whenever I buy or sell VTI.  I personally don't consider it a big deal, as I intentionally trade so infrequently that the extra cost is negligible and is worth it to own a quality fund like VTI.  That said, Fidelity is really good about NOT charging that commission for reinvested dividends.  I can't speak for how TDA or other brokerages work in that regard, and I agree that would be a dealbreaker.
*snip*

Possibly a dumb question:  Why are you using Fidelity to buy a Vanguard fund for $8 a pop when Fidelity has its own equivalent (FSTVX, I think?) with no commission?  Is it the fact that it is a Vanguard fund?

I'm not sure why you don't do Fidelity + Fidelity funds OR Vanguard + Vanguard funds.

It's not a dumb question at all.  There are a few reasons.

First, I personally prefer ETFs over mutual funds and Fidelity's internal ETF selection is pretty thin (they have tons of mutual funds, though). Also, in my Fidelity account I intentionally spread my money between a few different fund providers (Vanguard, iShares, Schwab, etc) to minimize counter-party risk.  And finally, I like how VTI perfectly complements my other US stock fund VB because of the way they're structured internally.  Basically, the Fidelity version is a fine option but I have multiple goals that push me to not rely solely on Fidelity offerings.   And that's before you get to cases (like a physical gold index) where Fidelity and Vanguard don't offer a good fund option and the only choice is to look elsewhere.

BTW, many iShares funds are also commission-free at Fidelity and since my last post I also noticed that they recently lowered their commissions to $5 for all the rest.

That was a great explanation.  Thank you!

[Rural]

Looks like Vanguard is now recommending "ComputerHealthsavings" for HSAs with Vanguard funds: https://personal.vanguard.com/us/whatweoffer/overview/healthsavings


Anyone know anything about them?

Uh... your comment and your link don't match.

The companies listed in the article are HealthSavingsAdministrators and HealthEquity. I personally have HealthEquity. They have Vanguard institutional plus funds. Expense ratios as low as 0.02%. :D

Edit: Oh I see what you did. If you copy paste Health Savings Administrators there is a computer icon next to Health Savings so when you paste it on MMM it comes up as "ComputerHealthSavings Administrators."

Ah, suddenly all is clear. I have images turned off on my home machine because my home DSL (all we can get) sucks so hard. The "computer" part was the alt text, an example of good coding so rare that I didn't reconize it.

[Inaya]

PTF since my HSA is through TDA.

[PizzaSteve]

Anyone have a link to what ETFs will specifically be removed?  I can't find it.

[Hargrove]

ETFs going away:

https://www.tdameritrade.com/retail-en_us/resources/pdf/TDA1000834.pdf

ETFs in the program soon:

https://www.tdameritrade.com/retail-en_us/resources/pdf/TDA1000835.pdf

[smallstache]

I don't see a good no-commission replacement for VYM. SPYD has a fraction of the holdings and DEW has almost 8x the cost.

[Hargrove]

Yeah, the industry is probably seeing the writing on the wall by trying to cut out Vanguard, but I would rather sell off anything affected at TD and move it into Vanguard. At this point, I have mostly done so.

I like TD's tools. Their commission rates became sane this year. But I'm not willing to pay those expense ratios, or play musical chairs with a free ETF portfolio that cuts out the ones I happen to be using.

[smallstache]

Yeah, the industry is probably seeing the writing on the wall by trying to cut out Vanguard, but I would rather sell off anything affected at TD and move it into Vanguard. At this point, I have mostly done so.

I like TD's tools. Their commission rates became sane this year. But I'm not willing to pay those expense ratios, or play musical chairs with a free ETF portfolio that cuts out the ones I happen to be using.

I would agree, except Vanguard does not offer Coverdell Education Savings Accounts.  Vanguard only offers 529 plans, which have higher expense ratios than the underlying funds.  For example, the "Total Stock" portfolio is .17%, which is more than the investor-class VTSMX.  I'm not sure how much of this Vanguard keeps and how much goes to pay off the State of Nevada.

[SomedayStache]

aw man, it was only a few days ago that I stumbled upon the option to enroll in DRIP at my VTI invested stock at TDameritrade (linked to my HSA at HSABank).  Posting to follow so I don't forget about this and to help determine my actions going forward.

[PizzaSteve]

To some degree good timing.  My year is up for my rollover bonus of $1000 per 250k.  This will be my reason to transfer to Fidelity the top bidder for more bonuses.  (looks like schwab and fido arent playing right now, though a Bogleheads thread says they might grant a bonus if you call).

[Inaya]

I only transfer my HSA Bank funds quarterly, so I think I'm going to continue in VTI and eat the commission fee 4 times a year.

[PlainsWalker]

Looking at the list of new Commission-Free ETFs I like the expense ratio of -32768.00% for ACWI along with a few others on this report https://research.ameritrade.com/grid/wwws/common/reports/commissionfreeReport.asp. I highly doubt they're actually paying a negative expense ratio.

[RWD]

Looking at the list of new Commission-Free ETFs I like the expense ratio of -32768.00% for ACWI along with a few others on this report https://research.ameritrade.com/grid/wwws/common/reports/commissionfreeReport.asp. I highly doubt they're actually paying a negative expense ratio.

-32768 the maximum negative value representable by a 16-bit signed integer (probably two's complement). Clearly erroneous data.

[elysianfields]

I received another message from TD Ameritrade, which I share below for your edification:

Dear Valued Client,

Last week, you received an email about the upcoming launch of our new commission-free ETF Market Center. Since then, we've learned investors could use more time to evaluate the new fund line-up. So we're extending the effective date to January 19, 2018, giving you 90 days to review the funds and make any changes.

The restructured commission-free platform triples the number of ETF choices to 296 - the most in the industry - including many that are among the lowest-cost core ETFs available in the market today. We've also increased exposure to 77 Morningstar categories, including such strategies as smart beta, actively managed, market sectors and commodities providing more options for you to tailor your portfolio. We appreciate that this is a big change and we want to make sure you have the time and information you need.

Key takeaways:

• We have extended the commission-free transition period for legacy ETFs until January 19, 2018.
• All new funds are available to trade commission-free today.
• After January 19, 2018, the 84 legacy funds will still be available at TD Ameritrade at the standard online commission rate. The remaining 16 funds will continue to be a part of the enhanced ETF Market Center.
• All other previously communicated changes remain in place. Enrollment and short-term redemption fees will be eliminated effective November 20, 2017. Selling legacy ETFs prior to November 20,2017 may incur a short-term redemption fee.

[boarder42]

Looks like Vanguard is now recommending "ComputerHealthsavings" for HSAs with Vanguard funds: https://personal.vanguard.com/us/whatweoffer/overview/healthsavings


Anyone know anything about them?

https://healthsavings.com/vanguard/fees/

Fees look really high to me

[Daisy]

PTF

I already have an IRA with TD Ameritrade and was going to roll over my 401k to that IRA to take advantage of commission free Vanguard funds. Now I have to rethink this and see if I should just create a new IRA directly with Vanguard for the rollover.

[DarkandStormy]

http://www.investmentnews.com/article/20171023/FREE/171029979/td-ameritrade-triples-time-before-it-charges-fees-on-popular-etfs

They've extended the date out to Jan. 19, 2018.

[VoteCthulu]

Looks like Vanguard is now recommending "ComputerHealthsavings" for HSAs with Vanguard funds: https://personal.vanguard.com/us/whatweoffer/overview/healthsavings


Anyone know anything about them?

https://healthsavings.com/vanguard/fees/

Fees look really high to me

Yeah, HS administrators is $45 + 25 basis point per year with first dollar invested and health equity is $36 + 24 basis points per year requiring $1000 uninvested. Neither wins any prizes in my book.Hopefully Vanguard will offer a HSA directly some day.

[TomTX]

To some degree good timing.  My year is up for my rollover bonus of $1000 per 250k.  This will be my reason to transfer to Fidelity the top bidder for more bonuses.  (looks like schwab and fido arent playing right now, though a Bogleheads thread says they might grant a bonus if you call).

BoA/Merrill Edge will pay you $600 and only requires a 90 day dwell time last I checked.

It also qualifies you pretty quickly for BoA Preferred Rewards bonuses, which are pretty sweet for the cash back credit cards (BoA branded, not co-brands administered by BoA) Sure, I'll take 3.5% back at Costco and grocery stores, 5.25% on gas.

Better yet, once you qualify for Preferred Rewards, you keep the status until your anniversary date of enrolling in Preferred Rewards.

[SpareChange]

http://www.investmentnews.com/article/20171023/FREE/171029979/td-ameritrade-triples-time-before-it-charges-fees-on-popular-etfs

They've extended the date out to Jan. 19, 2018.

They did, but it looks to be only for institutional accounts, not retail. I received an email from them about this for my HSA, but not my taxable or IRA accounts.