Archive | February, 2010

Will We Soon Trade ETFs for Free?

Exchange-traded funds may be the best products ever to come along for retail investors, but they still have at least one major drawback: they incur a trading commission every time you buy and sell them. If you’re a customer of one of the big bank’s discount brokerages, you pay as much as $29 per trade, a fee that makes monthly contributions and dollar-cost averaging prohibitively expensive.

Claymore took a big step toward improving this situation last year when it became the only ETF sponsor to offer pre-authorized cash contributions (PACCs): after making an initial purchase, you can arrange to make regular monthly, quarterly or annual contributions without additional fees. Unfortunately, not all brokerage houses have embraced this arrangement yet (I recently had problems setting up a Claymore PACC with Scotia McLeod), and it’s not as flexible as what you’d get from a portfolio of mutual funds.

But the game is beginning to change, at least south of the border. Beginning today, Fidelity Investments in the US will allow its customers to buy a lineup of 25 popular iShares ETFs with no trading commissions. The move follows a similar one by Charles Schwab,

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More new ETFs from iShares and BMO

Last Monday, January 25, BMO launched nine new exchange-traded funds, bringing its total number of ETF offerings to 22:

BMO China Equity Hedged to CAD (ZCH)
BMO India Equity Hedged to CAD (ZID)
BMO Nasdaq 100 Equity Hedged to CAD (ZQQ)
BMO Global Infrastructure Index (ZGI)
BMO Equal Weight Utilities Index (ZUT)

BMO Junior Gold Index (ZJG)
BMO Mid Corporate Bond Index (ZCM)
BMO Long Corporate Bond Index (ZLC)
BMO Aggregate Bond Index (ZAG)

Then on Wednesday, January 27, iShares launched six new funds of their own:

iShares China (XCH)
iShares S&P CNX Nifty India (XID)
iShares MSCI Brazil (XBZ)
iShares S&P Latin America 40 (XLA)
iShares U.S. IG Corporate Bond Hedged to CAD (XIG)
iShares U.S. High Yield Bond Hedged to CAD (XHY)

The BMO Aggregate Bond Index (ZAG) is an interesting creation. It tracks a version of the DEX Universe Bond Index (the most widely followed fixed-income benchmark in Canada) that excludes municipal bonds.

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