Last week I wrote about the top discount brokers that offer U.S Dollar RRSPs/TFSA accounts with Qtrade Investor as one of the candidates. After that post, a number of readers emailed me about Qtrade and what makes them so popular, especially among Globe Investor readers.
As one of the few independent discount brokerages remaining, Qtrade can keep up with the big banks through innovation. The features that stand out the most with Qtrade Investor are their USD RRSP/TFSA and commission free ETFs offerings. However, although they can keep up with the big banks, they don’t quite keep up with the other independent brokers like Questrade or Virtual Brokers. Keep reading to find out why.
Like most other Canadian discount brokers, Qtrade offers the standard fare in types of accounts available to investors. These include Cash, Margin, Corporate, RSP, RIF, LIF, RESP and TFSA.
Commission and Fees
This is a category that I pay most attention – just how much is the account going to cost me in the long run? In order to judge this, I look at the ongoing trading fees and the maintenance fees. Their website details that they have no maintenance fees on their cash, margin and TFSA accounts. However, there is a $50 fee for RRSPs for smaller accounts (<$15,000). In addition, they charge $50/year for their US Dollar RRSP regardless of balance.
In terms of trading commissions, for an independent discount broker, their trading commissions are high for smaller accounts. For accounts less than $50,000, buying or selling shares costs $19/trade but decreases to $9.95/trade once the account reaches $50,000. Active traders doing 30-149 trades/quarter get charged $9.95/trade while high volume traders (150+ trades/quarter) gets the preferred rate of $7/trade.
In my opinion, the higher balance requirement (thus higher fees) is where Qtrade stumbles vs the other smaller brokers.
Foreign Exchange Rates (FX)
I’ve been told by an MDJ reader that FX charges for CAD/USD are:
1.75% for < $10k, 1.60% for > $10k but < $25k
U.S Dollar RRSP
If I was looking for a new discount broker, one feature that I would require is the ability to hold USD in my RRSP. Being dinged 1.75%-2% to purchase and sell a US stock is simply too much. At least with a USD RRSP, the sale of US stocks (and dividends) will settle in USD, thus avoiding the FX fee.
While Qtrade offers a USD RRSP, it doesn’t offer the best USD RRSP out there. What sets it behind the competition is that they charge $50/year for the USD RRSP account regardless of balance and another $50/yr if the account is less than $15,000. On top of that, investors need at least $50k to qualify for the $9.95/trade.
Commission Free ETFs
For index investors, having a discount broker that offers commission free ETFs can be a big money saver. While the other independent brokers also offer commission free ETFs, Qtrade Investor followed the iTrade model. That is, a select list of 60 ETFs that can trade completely free on both the buy and sell.
Reviewing the list of ETFs available, an index investor can put together a low cost ETF portfolio, but it is very limited in choice. For example, they are missing the popular ETFs such as XIU, Vanguard Canada ETFs, and key Vanguard US ETFs such as VTI, VEA, VWO, VIG and VXUS.
Personally, for long term investors, it’s likely a better deal to have access to ALL ETFs for free commission when buying, but having to pay when selling (like Questrade or Virtual Brokers).
Altogether, Qtrade Investor is a comprehensive discount brokerage that offers a bit of everything, but simply not the best at anything. As an independent brokerage, they have high account balance requirements which is not ideal for beginner investors. While they do offer USD RRSPs and Commission Free ETFs, the other independents simply have a better offering. Here are their direct competitors; MDJ readers favorite Questrade, and low cost Virtual Brokers.
See how Qtrade Investor compares to other Canadian discount brokerages here.