Naturally, the Globe and Mail Online Brokerage Ranking does not put a huge weighting on commissions for buying and selling mutual funds.
The path to DIY investing often starts with a decision to get out of mutual funds and into exchange-traded funds, stocks and bonds. But the low-fee mutual funds available to DIY investors can make a compelling case for considering these products as well. Look for Series D or Series F mutual funds, with commissions for advisers stripped away.
Now, let’s take a look at the commissions the brokers in the ranking charge clients who buy and sell mutual funds. Interactive Brokers and Wealthsimple are in the broker ranking, but not included here because they don’t do mutual funds.
BMO InvestorLine: No commissions charged on mutual funds
CIBC Investor’s Edge: No commissions for money market funds or high interest savings accounts; other mutual funds cost $6.95 to buy or sell.
CI Direct Trading: No commissions
Desjardins Online Brokerage: No commissions for most funds; $32 per trade for a small number of exceptions; note that Desjardins has zero commissions for stocks and ETFs.
HSBC InvestDirect: $6.88 per order
National Bank Direct Brokerage: No commissions for mutual funds, same as for stocks and ETFs.
Qtrade Investor: $8.75 per order
Questrade: $9.95 to buy or sell
RBC Direct Investing: Buy or switch orders cost 1 per cent of the gross amount of the trade to a maximum of $50, no sell commissions
Scotia iTrade: $9.99 per trade, excluding money market funds and high interest savings accounts
TD Direct Investing: No commissions
I’ve been big on passive index investing through low-cost ETF for ages, but the ETF industry has recently been introducing high fee funds that focus on particular market niches or strategies. If you’re open to paying the cost of these funds, you might also want to consider what’s available in Series F mutual funds. Management expense ratios for these funds in the Canadian equity and dividend category can be in the 0.75 to 0.85 per cent range.
One further point on buying mutual funds through a digital broker: Be sure about your choice. If you sell within 90 days, you may have to pay a short-term redemption fee.
--Rob Carrick, personal finance columnist
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Editor’s note: This article has been updated toc clarify that commissions for advisors are stripped away from Series D mutual funds, as well as Series F funds.