In 2004, Wiser Wealth Management began using Exchange Traded Funds (ETFs) in its portfolios. At the time, ETFs were new to the individual investor, but Wiser saw the benefits of the product: low cost, liquidity, and diversification. Today, many fee only advisors are using ETFs in some capacity. With the popularity of ETFs on the rise, our custodian, TD Ameritrade Institutional, announced on Friday, October 8, 2010 that they are offering commission free trades on 100 ETFs. The ETFs to trade free will be selected by Morningstar based on factors including tracking error, excess return, expense ratio, and tax efficiency.
The providers participating in the free commission trades are as follows:
Barclays Bank PLC
Deutsche Bank AG
On this list of 100 ETFs, there are eleven that Wiser uses in its ETF portfolio models. There is great news for our younger clients who contribute monthly to their accounts. The iShares asset allocation ETFs are included in this list. This means that you can invest monthly into AOA, AOM, AOR, AOK or AOC and 100% of your funds get invested without having to pay a $9.99 commission to TD Ameritrade.
Most accounts at Wiser Wealth hold twelve ETFs. Assuming a rebalance is needed on an annual basis, this new program at TD Ameritrade will save our clients $60 a year. Clients contributing to their accounts on a monthly basis will save $120 a year, and new clients will save at least $200 the first year.
Wiser maintains five ETF models managed for overall investment risk. The listing of commission free ETFs will be added to our screening process during our next model review.