If you’ve been following personal finance news over the past little while, you may have heard about a groundbreaking offer from Scotia iTrade that no other Canadian stock broker offers – FREE ETF trades.

This is big news for index investors as they can avoid the $19.95 trading commission ($9.95 for those with $50k balance) when they rebalance their portfolios.  If the investor holds five different ETFs in the portfolio, the savings can be quite significant depending on how often he/she rebalances.

Sounds great but the down side is that there are some limitations to the ETFs that can be traded for free.  Some of these considerations include  low trading volumes (low liquidity), tracking error, and management expense ratios.

Here is more info about the ETFs eligible for commission free trading:

In Canada, only Scotia iTRADE® brings you commission-free* online trading on 46 ETFs from Claymore ETFs®* and other leading Canadian ETF providers1. Covering a number of sectors the 46 ETFs that are available for commission-free* online trading through Scotia iTRADE include:

  • 31 Claymore Funds
  • 8 iShares Funds
  • 7 Horizons Funds

A full list is here.

Of the ETFs offered, there a few that I hold and/or watch regularly.  They include:

  • CLF – Claymore laddered short term government bonds (MER: 0.17%)
  • CBO – Claymore laddered short term corporate bonds (MER: 0.28%)
  • CPD – Claymore preferred shares (MER: 0.50%)
  • CDZ – Claymore Dividend Achievers Index (MER: 0.67%)
  • CMR – Claymore money market (MER: 0.27%)

For the Couch Potato Index investors out there, it seems that a portion of trading commissions can be reduced by using the short term bond ETFs and perhaps the money market fund for the cash component.   However, for those who want a completely commission free portfolio (besides MER), they can consider:

  • Canadian Index: CRQ (MER: 0.71% ) or HXT (MER: 0.07% – but take note that they use SWAPS rather than holding actual stocks)
  • US Index: CLU (MER: 0.72% ) or HXS (0.15% again, they use SWAPS)
  • International Index: CIE (MER: 0.73%) or
  • Global Real Estate: CGR (MER: 0.74%)
  • Short Term Bonds: CLF (MER: 0.17%)

Is this free ETF offer attractive to you?  Are you considering switching to iTrade?


  1. Chris on September 19, 2011 at 9:09 am

    This is a huge development and will force all of the other online brokers to add commission-free ETF trades.

    The big thing about this is that it takes away the one and only advantage of a mutual fund. If I can trickle in a little bit of money every month into index funds with microscopic MER’s then there is absolutely no reason for mutual funds to exist.

    So long expensive mutual funds!

  2. Rick on September 19, 2011 at 3:03 pm

    Funny why BMO doesn’t offer com-Free ETFs on its own funds. You’d think they would be first to do so.

  3. SavingMentor on September 19, 2011 at 3:33 pm

    I think this is a very attractive offer. I’m not switching to iTrade for now but I will definitely be watching how this develops and hopefully Questrade will come out with a competing offering sometime soon!

    I also need to rethink my investment strategy sometime soon. I’m of so many different minds regarding what is the best approach for me and my family – I seem to change my mind every few months. I need to come up with a solid plan and stick with it!

  4. Bob on September 20, 2011 at 10:52 am

    Good stuff. But the combined MER on my couch potato e-series index mutual funds is still lower than any comparable portfolio I could construct with the available commission-free ETFs

  5. Travis on September 20, 2011 at 11:27 am

    Nice! For now the higher MER’s look like they are more than the price of paying the commission with a lower MER ETF. However for monthly contributions these would be very attractive.

  6. Dr Dale Rathgeber on September 20, 2011 at 1:15 pm

    This is great news for momentum and calendar investors.

  7. Elbyron on September 20, 2011 at 3:04 pm

    This is a big step forward, but Bob makes a good point. Why would an index investor change from free mutual fund trading to free ETF trading if most of the ETFs available for free have a higher MER than the equivalent type of fund?
    I guess some people don’t like the funds offered in the e-series and would consider some of the Claymore or iShares options to be worth the higher MER. And the Claymore short-term bonds is something I might consider next time I need to add more bonds, but for now I think I’ll stick with e-Series and avoid over-complicating my couch potato portfolio.

    Does anyone know if these iTrade ETFs can be held within a TFSA or other registered accounts?

  8. Horstradamus on October 1, 2011 at 1:20 pm

    @ Elbyron

    Yes, I’m currently with Scotia iTrade and TFSA and RRSP can hold these ETFs.

  9. daftster on November 16, 2011 at 10:48 am

    Hi all,

    are there any other fees that i should be aware of if I have to start using scotia itrade commission free etfs offering? (any annual fee?)


  10. slantendocular on October 10, 2012 at 4:22 am

    There is an annual fee with Scotia iTrade of $112 if you have your money in an RRSP. There were also significant fees if you ever want to withdraw your money from Scotia iTrade.

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