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ETFs: T. Rowe Price, TD Ameritrade, and Scottrade

Three discount brokerage houses that house exchange-traded funds (ETFs) are T. Rowe Price, TD Ameritrade, and Scottrade. All three are well-known within the investing community, each with its own advantages.

T. Rowe Price

This Baltimore-based shop has several claims to fame, including its bend-over-backwards friendliness to small investors and its plethora of really fine financial tools, especially for retirement planning, available to all customers at no cost.

The price of trading is a wee bit higher than average for a discount broker. ETFs cost $9.95 to $19.95 per online trade, depending on how much money you have invested and how often you trade. Recently, T. Rowe Price has been gearing up to launch its own lineup of ETFs, which rumor has it will all be actively managed.

The service at this firm is excellent (reps tend to be very chummy). If you decide that part of your portfolio should be in mutual funds, you can do a lot worse than going with T. Rowe Price’s lineup of entirely load-free funds.

TD Ameritrade

For a number of years, TD Waterhouse and Ameritrade were known as the discount kings of the brokerage biz. They merged several years ago to form TD Ameritrade. The trading prices at TD are just about middle of the pack.

The service at TD Ameritrade is reputedly quite high. The website has a very clean and crisp feel to it. On the down side, the TD culture and many of the articles on the website promote frequent trading, as opposed to, say, Vanguard, where the culture is decidedly more buy-and-hold. (The same two philosophies exist among different providers of ETFs.)

At the moment, this firm is offering commission-free online trades on 100 ETFs (certain iShares, Vanguard products, SPDRs, and PowerShares funds), BUT you must hold them for at least 30 days or you’ll need to cough up $20 per trade.

All other ETFs cost $10 per online trade. In 2010, the firm acquired online futures brokerage thinkorswim, where ETFs trade for $5 and no-load mutual funds trade fee-free regardless of their sponsor.

Scottrade

In March 2011, Scottrade rolled out its own lineup of 15 ETFs, called FocusShares, which you can trade online with no commissions. All other ETFs cost $7 to trade online.

You will need other ETFs: The FocusShares offerings, although they boast some of the lowest ongoing management fees in the business, cannot in and of themselves form a complete portfolio. At present, there is not a single non-U.S. fund in the lot.

Like TD Ameritrade, the culture at Scottrade doesn’t seem to promote wise investor behavior. The home page of the website, for example, is filled with offers for the latest apps to allow you to make trades from your cell phone.

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