When I first heard that National Bank Direct Brokerage (NBDB) was now offering commission-free trades on all Canadian ETFs, I was impressed.  Questrade has been the fan favourite in this low-fee space for awhile now, but their commission-free deal only applied to ETF purchases (not sales).

Source: National Bank Direct Brokerage as of November 24, 2016

After opening an account with NBDB and placing my initial ETF trades, I quickly realized I was still being charged commissions on a number of trades. I reviewed their website again, and noticed a little red star after one of their marketing pitches (see above).

Turns out, you need to buy or sell at least 100 shares of an ETF in order to qualify for their commission-free ETF promotion. This is still a better deal than most of the big banks, but I couldn’t help feeling misled by their advertising.

Avoiding the $9.95 trading commission

As mentioned above, 100 shares of an ETF must be traded in order to qualify for zero commissions. ETFs with higher share prices will require a larger trade size to be eligible for zero commissions. For example, you’ll need to buy or sell over $4,000 worth of the Vanguard U.S. Total Market Index ETF (VUN) in order to avoid the trading commission.

I’ve included the approximate commission-free ETF dollar amounts in the chart below, to help you with your ETF choices.

Approximate Commission-Free Trading Amounts at NBDB

Asset ClassSecurityCommission-Free Account
Canadian BondsiShares Core High Quality Canadian Bond Index ETF (XQB)$2,122
Canadian BondsVanguard Canadian Aggregate Bond Index ETF (VAB)$2,618
Canadian BondsBMO Aggregate Bond Index ETF (ZAG)$1,613
Canadian StocksiShares Core S&P/TSX Capped Composite Index ETF (XIC)$2,345
Canadian StocksVanguard FTSE Canada All Cap Index ETF (VCN)$2,988
Canadian StocksBMO s&P/TSX Capped Composite Index ETF (ZCN)$1,999
US Stocksshares Core s&P U.S. Total Market Index E?TF (XUU)$2,190
US StocksVanguard U.S. Total Market Index ETF (VUN)$4,081
US StocksBMO s&P 500 Index ETF (ZSP)$3,150
International StocksiShares Core MSCI EAFE IMI Index ETF (XEF)$2,646

Sources:  BMO ETFs, BlackRock Canada, Vanguard Canada as of October 31, 2016


Avoiding the annual administration fee

NBDB also charges $100 plus tax if you don’t invest at least $20,000 with them (so this should be the recommended minimum starting point for any investor).


How to Build an ETF Portfolio at National Bank Direct Brokerage

For those investors who are eager to set-up an ETF portfolio at NBDB, I’ve included a tutorial below that will show you how to get started. In the video you’ll see examples of commission-free ETF trades (as well as the other kind).  To reduce the number of trades, consider swapping out VUN, XEF and XEC for the iShares Core MSCI All Country World ex Canada Index ETF (XAW) – this would have resulted in zero-commissions payable for the initial portfolio set-up.