Building Sample Portfolios With Commission-Free ETFs

Inside this Wall Street Journal article about the recent phenomenon of brokers offering commission-free ETFs, portfolio manager Rick Ferri constructed some sample portfolios from the available offerings of Fidelity, Schwab, TD Ameritrade, and Vanguard.

In this Bogleheads thread, Ferri clarifies that these portfolio are not necessarily complete sample portfolios, just what you might be able to build given what was available. Still, a potentially helpful exercise.

The portfolios I provided for today’s Wall Street Journal article were created under a strict WSJ mandate. I was to take only the free trade ETFs available at each firm and form as similar as possible portfolios across all platforms. Since each platforms is different with many asset class choices being very limited, the portfolios contained only a very basic asset allocation. An ETF/index fund portfolio would hold more asset classes without the WSJ constraints.


  1. This is a great tip. I had no idea these were commission free. I just helped my girlfriend set up her Roth IRA investments and they are mostly Vanguard ETFs. I should have signed her up for a Vanguard account.

  2. Looking at the TDAmeritrade website, it looks like the free ETF trades at TDAMeritrade are available to new accounts only. No existing accounts will get this option. So, I would say that this is a little mis-leading. Here is a quote from their website taken from the small print:

    “Offer valid for one new Individual or Joint TD Ameritrade account opened by 06/30/2011 and funded within 30 days of account opening with $2,000 or more. ”

    Can you verify this?

    I know that Vanguard free trades are available to any Vanguard brokerage account. I don’t know anything about Schwab or Fidelity.

  3. Chris in Boston says:

    If you are a Merrill Lynch customer, you can get 30 free equity or ETF trades every month. The only think you need to qualify is deposits of $25,000 in FDIC insured accounts with Merrill, or Bank of America. These can be any combination of checking, savings, money market, or CDs.

    So you can trade with $0 commissions across any of the ETF families and do not need to open accounts at Vanguard, or other ETF management companies.

  4. I love commission free ETFs! I’ve been investing in Schwab’s new line of zero commission ETFs since they started offering them. I think its a great way to dollar cost average without spending too much on fees.

  5. Having commission free ETF’s is definitely changing passive investing for a lot of people. Before, index mutual funds were the only way to go since you had to pay higher ETF commissions. However, now that Vanguard’s instituted the commission free ETF policy, I’m starting to use them more in my investing strategy.

  6. I was coming around to the idea of no commission ETF’s as great way to invest money because of the stop loss feature. The flash crash in May has changed my mind. My fear is that too many people will be trading these funds instead of investing.

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