TD Ameritrade changing commission-free ETFs

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Pet Hog
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TD Ameritrade changing commission-free ETFs

Post by Pet Hog » Wed Oct 18, 2017 2:23 am

I received an email this morning heralding the "happy" news that TDA is tripling its number of commission-free ETFs. Unfortunately for us, they are no longer going to include VTI, TLT, or SHY among them. I haven't looked close enough through the list of new free ETFs to find suitable substitutes (still no gold ETF, it seems), but thought I'd pass on the news.
We will be replacing most of the ETFs currently on the commission-free ETF list with a broad new selection of ETFs from AGFiQ QuantShares, First Trust Portfolios, iShares ETFs, J.P. Morgan Asset Management, PowerShares by Invesco, ProShares, State Street Global Advisors’ SPDR Business, and WisdomTree Investments. These new ETF choices will be available in the ETF Market Center beginning October 17, 2017.

Current ETFs will remain on the commission-free list through November 20, 2017. Beginning November 21, 2017, they will trade at our standard low commission rates.

The new list will provide access to low-cost ETFs in the same asset classes that the current ETFs provide, along with several new asset classes. If you choose to replace any current position on the commission-free list with an ETF from the new list by November 20, 2017, you will not be charged commissions for either trade.
Link to pdf of new commission-free ETFs here
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ochotona
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Re: TD Ameritrade changing commission-free ETFs

Post by ochotona » Wed Oct 18, 2017 5:19 am

I'm sure you'll find direct replacements for VTI, TLT, SHY.

SPTL can replace TLT... slightly shorter duration.
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Re: TD Ameritrade changing commission-free ETFs

Post by sophie » Wed Oct 18, 2017 8:43 am

Ack. Thanks for letting us know!

I pulled up the list. The news is not good, as there are few commission free choices with low expense ratios. The SPDRA funds (stocks) have decent expense ratios, but I'd have to check them out in detail before switching. BIL should work for cash (1-3 month T bills), or SPTS (short government bonds).

I'll probably stick with VTI and TLT and just pay the commission fees as I only trade once a year. The cash options above are nice though.
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Kriegsspiel
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Re: TD Ameritrade changing commission-free ETFs

Post by Kriegsspiel » Wed Oct 18, 2017 10:33 am

sophie wrote:Ack. Thanks for letting us know!

I pulled up the list. The news is not good, as there are few commission free choices with low expense ratios. The SPDRA funds (stocks) have decent expense ratios, but I'd have to check them out in detail before switching. BIL should work for cash (1-3 month T bills), or SPTS (short government bonds).

I'll probably stick with VTI and TLT and just pay the commission fees as I only trade once a year. The cash options above are nice though.
Seriously, what the fuck, Ameritrade! My HSA runs it's investments through them. I do the same as you, Sophie: buy a big chunk of VT (set to DRIP) whenever I make the yearly contribution.
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Re: TD Ameritrade changing commission-free ETFs

Post by Tyler » Wed Oct 18, 2017 10:48 am

sophie wrote: I'll probably stick with VTI and TLT and just pay the commission fees as I only trade once a year.
Yeah, I feel like some people have been overreacting a bit. Some seem to have the impression that VTI is no longer an option at all, when in reality they're just adding a normal $7 trading fee just like the vast majority of other funds. I can see how that's a big problem if you're constantly buying small chunks, but if you simply save up and invest in larger chunks the impact is within your control. FWIW, I've been paying $8 per VTI trade at Fidelity for years and the impact of the commission on my bottom line is completely negligible for how little I trade.

That said, I do think the practice of baiting people into popular funds by waiving the commission only to reinstate the commission later is shady to say the least. In a taxable account, people are basically trapped because of the potential tax impact of switching funds. And you've gotta think there's cash being exchanged behind the scenes to drive investor money into the funds on the new commission-free list. I understand why people are upset, and I probably wouldn't stick with a broker that made a habit of that.
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ochotona
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Re: TD Ameritrade changing commission-free ETFs

Post by ochotona » Wed Oct 18, 2017 12:08 pm

Tyler wrote:
sophie wrote:In a taxable account, people are basically trapped because of the potential tax impact of switching funds. And you've gotta think there's cash being exchanged behind the scenes to drive investor money into the funds on the new commission-free list.
If the broker-to-broker transfer is in-kind and not cash, you don't have a taxable event.

Consider making your payday contributions into substantially similar no-fee choices, then selling them and moving into your preferred not-free choices every once in a while. I doubt you'd even see any kind of performance difference.
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Re: TD Ameritrade changing commission-free ETFs

Post by Xan » Wed Oct 18, 2017 12:20 pm

ochotona wrote:
Tyler wrote:
sophie wrote:In a taxable account, people are basically trapped because of the potential tax impact of switching funds. And you've gotta think there's cash being exchanged behind the scenes to drive investor money into the funds on the new commission-free list.
If the broker-to-broker transfer is in-kind and not cash, you don't have a taxable event.

Consider making your payday contributions into substantially similar no-fee choices, then selling them and moving into your preferred not-free choices every once in a while. I doubt you'd even see any kind of performance difference.
I believe Tyler is talking about the case where you want to stay with your broker, and switch between a previously-free fund to a now-to-be-free fund. Selling and buying in order to do that would definitely be taxable.
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Re: TD Ameritrade changing commission-free ETFs

Post by Tyler » Wed Oct 18, 2017 12:37 pm

Xan wrote: I believe Tyler is talking about the case where you want to stay with your broker, and switch between a previously-free fund to a now-to-be-free fund. Selling and buying in order to do that would definitely be taxable.
Yes, that's what I meant. It's true that you can avoid this by transferring shares in-kind to a new brokerage if it's really that much of a problem in your particular situation. I imagine TDA is banking on most people not being aware of that option and either sucking it up and paying the new commission or switching to a new commission-free fund while eating the tax bill on their own dime.
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Re: TD Ameritrade changing commission-free ETFs

Post by foglifter » Wed Oct 18, 2017 1:49 pm

Kriegsspiel wrote:
sophie wrote:Ack. Thanks for letting us know!

I pulled up the list. The news is not good, as there are few commission free choices with low expense ratios. The SPDRA funds (stocks) have decent expense ratios, but I'd have to check them out in detail before switching. BIL should work for cash (1-3 month T bills), or SPTS (short government bonds).

I'll probably stick with VTI and TLT and just pay the commission fees as I only trade once a year. The cash options above are nice though.
Seriously, what the fuck, Ameritrade! My HSA runs it's investments through them. I do the same as you, Sophie: buy a big chunk of VT (set to DRIP) whenever I make the yearly contribution.
My first reaction was similar. Then I calmed down and examined the list of new ETFs. It's certainly bad they dropped Vanguard, but they added quite a few SSgA ETFs with pretty low expense ratios. I have my HSA brokerage account at TDA and being a CA resident I only held Treasury bond ETFs EDV and IEI (to mimic the supposedly "bad" share-lending TLT) to avoid state tax. Turns out SPLT is a good and cheaper (0.06%) replacement for both EDV and TLT. Higher trading volume than EDV is also a plus. So I moved from EDV/IEI to SPLT. A slight gain from selling yesterday and buying today was an extra bonus.
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Re: TD Ameritrade changing commission-free ETFs

Post by Mr Vacuum » Wed Oct 18, 2017 5:36 pm

Tyler wrote:FWIW, I've been paying $8 per VTI trade at Fidelity for years and the impact of the commission on my bottom line is completely negligible for how little I trade.
Agreed at $8 but you will enjoy even more negligible $5 trades next time you rebalance.
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Re: TD Ameritrade changing commission-free ETFs

Post by farjean2 » Wed Oct 18, 2017 5:39 pm

I wonder if this is related in any way to all the emails I've been getting from Vanguard about switching my account to a brokerage account by November 3. I have no idea what that's all about because I was on vacation in Australia and Hawaii and haven't looked into it yet.
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Re: TD Ameritrade changing commission-free ETFs

Post by Kriegsspiel » Wed Oct 18, 2017 6:39 pm

foglifter wrote: I have my HSA brokerage account at TDA and being a CA resident I only held Treasury bond ETFs EDV and IEI (to mimic the supposedly "bad" share-lending TLT) to avoid state tax. Turns out SPLT is a good and cheaper (0.06%) replacement for both EDV and TLT. Higher trading volume than EDV is also a plus. So I moved from EDV/IEI to SPLT. A slight gain from selling yesterday and buying today was an extra bonus.
Why does being in California matter as to what investments you buy inside the HSA?
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