Ante-ing up and raising the stakes in the ETF price wars, TD Ameritrade Inc. announced Friday that it had launched an ETF Market Center designed for long-term investors and its affiliated RIAs that included 101 commission-free ETFs picked by Morningstar Inc. The list of ETFs on the Ameritrade platform includes multiple offerings from leading ETF sponsors, notably iShares and various SPDR funds, which cover major domestic and foreign equity and fixed-income indexes, commodities, and currencies.
Matt Judge, TD Ameritrade’s director of wealth management solutions, positioned the new platform as a “natural extension” of TD’s no-transaction-fee mutual fund platform, and said it was “consistent with our conflict-free” approach to providing objectively chosen investment options for both its affiliated advisors and the retail market, and to give advisors “a broader choice” of investment vehicles for their clients.
He emphasized as well that TD Ameritrade was not receiving any compensation from either the ETF sponsors or from Morningstar, which was solely responsible for picking the first family of 101 fund offerings. He expected that the ETFs offered would remain “fairly stable” over time, though Morningstar might add or subtract from the list.
The TD Ameritrade move was the latest in a series of ETF offerings and price cuts designed to increase the already widespread use of ETFs by advisors through making them more affordable and easier to access, a trend noted in a Vanguard study on low-cost ETFs. Schwab Investment Management kicked off the trend by releasing a list of no-commission ETFs of its own making; more recently it announced the acquisition of ETF specialist Windward. Vanguard itself followed suit, and recently announced nine low-cost equity ETFs.
No Hedge Funds or Day Traders Need Apply
Advisors who wish to take advantage of the ETF Market Center can sign up through TD Ameritrade’s Veo technology platform. Stressing that these ETFs are not designed for “day traders,” Judge said that participating advisors sign an agreement with the understanding that as long as the ETFs were held in an account for a minimum of 30 days, there would be no commission charged; those advisors who traded the ETFs before the 30-day period would incur a $19.95 charge.
Close to 80% of the advisors affiliated with TD Ameritrade already use ETFs in client portfolios, Judge said.
In the formal announcement of the ETF Market Center, TD Ameritrade president and CEO Fred Tomczyk said “We’re taking a better and more focused approach to helping our clients build long-term portfolios.”
In addition to gaining access to the commission-free ETFs themselves, the new platform includes an ETF screener and ETF data and analysis from Morningstar.