When I first heard that National Bank Direct Brokerage (NBDB) was now offering commission-free trades on all Canadian ETFs, I was impressed. Questrade has been the fan favourite in this low-fee space for awhile now, but their commission-free deal only applied to ETF purchases (not sales).
After opening an account with NBDB and placing my initial ETF trades, I quickly realized I was still being charged commissions on a number of trades. I reviewed their website again, and noticed a little red star after one of their marketing pitches:
Source: National Bank Direct Brokerage as of November 24, 2016
Turns out, you need to buy or sell at least 100 shares of an ETF in order to qualify for their commission-free ETF promotion. This is still a better deal than most of the big banks, but I couldn’t help feeling misled by their advertising.
As mentioned above, 100 shares of an ETF must be traded in order to qualify for zero commissions. ETFs with higher share prices will require a larger trade size to be eligible for zero commissions. For example, you’ll need to buy or sell over $4,000 worth of the Vanguard U.S. Total Market Index ETF (VUN) in order to avoid the trading commission.
I’ve included the approximate commission-free ETF dollar amounts in the chart below, to help you with your ETF choices.
| Global ex Canada Stocks | iShares Core MSCI All Country World ex Canada Index ETF (XAW) | Commisson-Free Amount |
|---|---|---|
| Canadian Bonds | iShares Core High Quality Canadian Bond Index ETF (XQB) | $2,122 |
| Canadian Bonds | Vanguard Canadian Aggregate Bond Index ETF (VAB) | $2,618 |
| Canadian Bonds | BMO Aggregate Bond Index ETF (ZAG) | $1,613 |
| Canadian Stocks | iShares Core S&P/TSX Capped Composite Index ETF (XIC) | $2,345 |
| Canadian Stocks | Vanguard FTSE Canada All Cap Index ETF (VCN) | $2,988 |
| Canadian Stocks | BMO S&P/TSX Capped Composite Index ETF (ZCN) | $1,999 |
| U.S. Stocks | iShares Core S&P U.S. Total Market Index ETF (XUU) | $2,190 |
| U.S. Stocks | Vanguard U.S. Total Market Index ETF (VUN) | $4,081 |
| U.S. Stocks | BMO S&P 500 Index ETF (ZSP) | $3,150 |
| International Stocks | iShares Core MSCI EAFE IMI Index ETF (XEF) | $2,646 |
| International Stocks | Vanguard FTSE Developed All Cap ex North America Index ETF (VIU) | $2,433 |
| International Stocks | BMO MSCI EAFE Index ETF (ZEA) | $1,634 |
| Emerging Markets Stocks | iShares Core MSCI Emerging Markets IMI Index ETF (XEC) | $2,357 |
| Emerging Markets Stocks | Vanguard FTSE Emerging Markets All Cap Index ETF (VEE) | $3,045 |
| Emerging Markets Stocks | BMO MSCI Emerging Markets Index ETF (ZEM) | $1,751 |
| Global ex Canada Stocks | Vanguard FTSE Global All Cap ex Canada Index ETF (VXC) | $3,039 |
| Global ex Canada Stocks | iShares Core MSCI All Country World ex Canada Index ETF (XAW) | $2,118 |
NBDB also charges $100 plus tax if you don’t invest at least $20,000 with them (so this should be the recommended minimum starting point for any investor).
For those investors who are eager to set-up an ETF portfolio at NBDB, I’ve included a tutorial below that will show you how to get started. In the video you’ll see examples of commission-free ETF trades (as well as the other kind). To reduce the number of trades, consider swapping out VUN, XEF and XEC for the iShares Core MSCI All Country World ex Canada Index ETF (XAW) – this would have resulted in zero-commissions payable for the initial portfolio set-up.
