SAN FRANCISCO -- Now that Wells Fargo has become the latest broker to offer commission-free trading, a major obstacle for many long term investors interested in exchange-traded funds is disappearing.
"We're seeing with Wells Fargo's offer that big, old-school banks are clearly following one another in eliminating cost barriers for individual investors interested in entering the ETF market," Jeroen Veth, chief executive at Zecco.com was quoted as saying by MarketWatch.
[Editor's Note: Get our top 4 ETF recommendations for 2007]
In the past, he noted, ETFs were largely used by big institutional investors because they could absorb the costs of commissions. But now with free trading, ETFs are readily available to smaller investors.
Last October, Zecco.com, an online financial portal, became the first U.S. online broker to offer free equity trading. The company also offers free trading in ETFs and stocks.
This week, Zeccoi began offering Individual Retirement Accounts.
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ETFs with zero commissions are proving to be very popular with our customers, said Veth. This is the wave of the future, he added.
According to MarketWatch, Wells Fargo said today that it's setting a $25,000 minimum for free equity and ETF trades. The bank said it will also allow a portion of mortgages held at the bank and other investment assets to count against that level.
MarketWatch pointed out that while Wells Fargo is allowing 100 free trades per account a year, Bank of America offers 360 free trades each year. Zecco is allowing up to 480 trades by individuals each year. It also has no minimums for IRAs or $2,500 or more in assets in brokerage accounts.
But unlike Wells Fargo and Bank of America, Zecco is allowing up to 480 trades by individuals each year. It also has no minimums for IRAs or $2,500 or more in assets in brokerage accounts.
According to Rachel Perkel, a senior vice president at Wells, about three percent of all trading volume is through ETFs. "ETFs have a lot of momentum in the marketplace right now," she commented.
Editor's note:
Get our top 4 ETF recommendations for 2007
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