Virtual Brokers Becomes the ETF Leader

The Globe and Mail announced its annual discount brokerage rankings yesterday and crowned a new winner. Virtual Brokers took top spot for 2012, ending a six-year run by Qtrade. In his article about the rankings, Rob Carrick commended the winner for its low costs and innovation, noting that “new for this year, commissions to buy any and all ETFs have been waived.” I have to admit that was news to me.

Following Scotia iTrade and Qtrade, Virtual Brokers became the third in Canada to offer a menu of commission-free ETFs last fall. (I’ve summarized the offerings of all three brokerages here.) VB’s current list of eligible ETFs has 100 names, including many from iShares and BMO, as well a few dozen US-listed funds, most of them very narrowly focused. All these ETFs can be bought and sold with no commission, as long as the two trades do not occur on the same day. However, what I had not realized—it’s not clearly explained on the site—is that Virtual Brokers now allows its clients to buy any ETF with no commission. You only incur a commission when you sell the ETF, and even then you pay only a penny per share, subject to a minimum of $0.99.

And yes, they confirmed with me that this policy applies to US-listed ETFs as well as those traded on the Toronto Stock Exchange.

I think it is fair to say that Virtual Brokers now offers the most compelling suite of services to ETF investors. I have often discouraged people with small accounts from using ETFs because the trading costs can make them far less efficient than index mutual funds. But with VB, you can now add new money to your portfolio every week or every month at no cost: you’d only pay commissions once or twice a year if it becomes necessary to trim a holding or two while rebalancing. The brokerage also levies no annual account fees on TFSAs, and no fee on RRSPs and other registered accounts as long as the balance is at least $15,000. (The one exception is a $25 annual fee for RESPs.) You can even hold US dollars in your registered accounts, although this service comes with a $50 annual fee.

Experienced investors know that low cost is not the only factor to consider when choosing a discount brokerage: user-friendliness and customer service are also important. For example, Rob Carrick pointed out that VB could improve by offering personalized performance reports—something all brokerages should do, though most do not. If any readers are using Virtual Brokers for their ETF portfolios, please share your experiences in the comments section.

105 Responses to Virtual Brokers Becomes the ETF Leader

  1. Simon S October 1, 2014 at 4:48 pm #

    Hi, it’s been a while since Virtual Brokers introduced their commission-free ETFs, and from the early comments on this post, it seems there were a lot of issues with customer service at the time.

    I am curious if anyone has any more recent experience with their service and could provide and update?

    Just trying to figure out if bad customer service is an ongoing issue with VB, or were they just swamped by new customers when they lowered their fees. Thanks!

  2. reginald March 16, 2015 at 1:37 pm #

    Customer service is very weak. I once called 3 time to get someone on the phone.. never happen. There more responsive by email… but still to slow for me!

  3. Rudey April 21, 2015 at 12:17 pm #

    Just opened up a TSFA account with them but not sure how to execute ETF trades as not too many resources. Wondering if perhaps someone can point me to right direction.

  4. Wes September 9, 2016 at 12:09 pm #

    I’ve been with VB since November 2013. RE customer service: they’re not rude, but they could afford to be more knowledgeable about their services (more often than not, they need to put me on hold to answer my question), and much like PC Financial, opening a new account plain sucks. It’s a major inconvenience, esp if you’re an existing client (no online application; must mail in forms or take them in in person). BUT I’m willing to suck it up because the penny commission is ridiculous.

    NOTE: as I understand it, VB has stopped offering its penny commission structure to new clients. You must be an existing client to still be offered this on new accounts (and even then, it seems to be at their discretion). As such, if you’re new to VB, you may want to look elsewhere. By getting rid of the penny commission structure, they have totally removed what sets them head and shoulders above their competition. I feel that was a very poor business decision on their part.

    @Rudey: you execute trades on their in-house platform, VB Webtrader v3.8. Make sure you select the desired commission structure from the dropdown menu at login. Happy investing!

  5. Wes September 9, 2016 at 12:10 pm #

    BTW: best way to get answers from VB is to call them. 416-288-8028, hit 1 for new accounts or 4 for technical service (read: all other inquiries). Wait time is usually within 5 min.

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