Everyone has their favourite online brokerage. Most often, it’s the first one a person ever opened. For me, it’s Qtrade.

Qtrade is an online brokerage based out of Vancouver, British Columbia. Buying stocks, ETFs and mutual funds cost $8.75/trade. However, they do offer a list of over 100 free ETFs. There is no minimum purchase amount to pay the $0 commission. This is one of Qtrade’s offers to stand out from other online brokerage companies such as Questrade, Wealthsimple, BMO, CIBC, TD, and Royal Bank.

Every online brokerage has an area where they try to stand out from the competition. Qtrade offers over 100 free ETFs. On all other trades, Qtrade charges a $8.75 commission. Qtrade is trying to become more competitive in the free ETF space.

Up until last year, investors had to purchase a minimum of $1000 to be eligible for the $0 commission. Thankfully now, there is no minimum purchase. You can buy one share if you want.

When I first started investing on Qtrade 5 years ago, I thought the free ETFs were great. They offer free Canadian and U.S. listed ETFs.

Qtrade’s free ETFs include:

Geographically Diverse ETFs
Responsible Investing ETFs
Thematic ETFs
Fixed Income ETFs
Equity ETFs
All in One ETFs

Unfortunately, they don’t advertise that the majority of the free ETFs have high management expense ratios(MERs). Many of them being between 0.5% and 0.8%. Which for index investors, is quite high.

For example – XEM iShares MSCI Emerging Markets Index ETF is a free Qtrade ETF but has a MER of 0.82%. While this MER is far lower than the average mutual fund fee in Canada, there are similar funds such as VEE Vanguard FTSE Emerging Markets All Cap Index ETF (MER 0.24%) and XEC iShares Core MSCI Emerging Markets IMI Index ETF (MER 0.27%).

As I’m slowly learning about index investing and the importance of keeping fees low, my love for these free ETFs is waning. The majority of the free ETFs on Qtrade are not low cost index funds. They are thematic ETFs concentrated in specific areas or a more expensive version of a cheaper fund.

I went through the whole list to find which had the lowest MERs with the most broad based exposure.

Free Canadian Listed Low Cost ETFs

XMC – iShares S&P U.S. Mid-Cap Index ETF (MER 0.16%)

U.S. Equity
U.S. Midsize Companies
Underlying holdings: 401
No holding is > 1% of fund

HXT- Horizons S&P/TSX 60™ Index ETF (MER 0.07%)

Canadian Equity
Underlying Holdings: 60
Largest Holding – Royal Bank (7.76%)

HXS – Horizons S&P 500® Index ETF (MER 0.10% + Swap Fee)

U.S. Equity
Underlying Holdings: 500
Largest Holding: Apple (7%)

XINC – iShares Core Income Balanced ETF Portfolio (0.20%)

40% Equities (U.S., CDN, International, Emerging markets)
60% Fixed Income

XBAL – iShares Core Balanced ETF Portfolio (0.20%)

60% Equities (U.S., CDN, International, Emerging markets)
40% Fixed Income

XGRO – iShares Core Growth ETF Portfolio (MER 0.20%)

80% Equities (U.S., CDN, International, Emerging markets)
20% Fixed Income

XEQT – iShares Core Equity ETF Portfolio (MER 0.20%)

100% Equities (U.S., CDN, International, Emerging markets)

Check out my post on Everything you need to know about iShares all in one portfolios to find out more details on XINC, XBAL, XGRO, and XEQT. iShares also offers XCNS iShares Core Conservative Balanced ETF Portfolio but for some reason Qtrade doesn’t offer it as one of their free ETFs.

Fixed Income

DCS – Desjardins Canadian Short Term Bond Index ETF (MER 0.08%)

Short Term Bonds
Number of Holdings: 377
Distribution Frequency: Monthly
Average Maturity: 2.63 Years
Yield to Maturity: 3.96%
Distribution Yield: 2.00%

DCU – Desjardins Canadian Universe Bond Index ETF (MER 0.08%)

Number of Holdings: 1148
Distribution Frequency: Monthly
Average Maturity: 9.76 Years
Yield to Maturity: 3.76%
Distribution Yield: 2.00%

XQB – iShares High Quality Canadian Bond Index ETF (MER 0.13%)

Number of Holdings: 446
Distribution Frequency: Monthly
Average Maturity: 8.79 Years
Weighted Average Coupon Rate: 2.87%
Distribution Yield: 2.94%

XGB – iShares Core Canadian Government Bond Index ETF (MER 0.13%)

Number of Holdings: 453
Distribution Frequency: Monthly
Average Maturity: 10.61 Years
Weighted Average Coupon Rate: 2.70%
Distribution Yield: 2.72%

Free U.S. Listed Low Cost ETFs

VIS – Vanguard Industrials ETF (MER 0.10%)

Number of Holdings: 369
Focus: Companies that create finished products from unfinished materials.
Largest holding is Raytheon Technologies Corp.(3.86%)
Distribution Frequency: Quarterly
SEC 30 Day Yield: 1.36%

VHT – Vanguard Health Care ETF (MER 0.10%)

Focus: Medical products, equipment, and services
Underlying Holdings: 410
Largest Holding: UnitedHealth Group Inc.(7.96%)
Distribution Frequency: Quarterly
SEC 30 Day Yield: 1.33%

VOX – Vanguard Communication Services ETF (MER 0.10%)

Focus: Telephone, data transmission, cellular, and wireless services
Underlying Holdings – 116
Largest Holding – Facebook (17%)
Distribution Frequency: Quarterly
SEC 30 Day Yield: 0.83%

VPU – Vanguard Utilities ETF (MER -0.10%)

Focus: Electricity, water, and gas
Underlying Holdings – 64
Largest Holding – NextEra Energy Inc (13.57%)
Distribution Frequency: Quarterly
SEC 30 Day Yield: 3.03%

VDE – Vanguard Energy ETF (MER – 0.10%)

Focus: Explore and produce oil, natural gas, and coal
Underlying Holdings – 112
Largest Holding – Exxon Mobil Corp (23.85%)
Distribution Frequency: Quarterly
SEC 30 Day Yield: 3.15%

VCR – Vanguard Consumer Discretionary ETF (MER – 0.10%)

Focus: Consumer Products
Underlying Holdings – 307
Largest Holding – Amazon.com Inc.(21.99%)
Distribution Frequency: Quarterly
SEC 30 Day Yield: 0.84%

VAW – Vanguard Materials ETF (MER – 0.10%)

Focus: Extraction and processing of raw materials
Underlying Holdings – 114
Largest Holding – Linde plc (15.69%)
Distribution Frequency: Quarterly
SEC 30 Day Yield: 1.64%

U.S. Fixed Income

BGRN – iShares USD Green Bond ETF (MER 0.20%)

Promote climate and environment
Number of Holdings: 315
Distribution Frequency: Monthly
Average Maturity: 7.69 Years
Yield to Maturity: 5.09%
Distribution Yield: 2.00%

VCEB – Vanguard ESG U.S. Corporate Bond ETF (MER 0.12%)

Earth and human friendly bonds
Number of Holdings: 2507
Distribution Frequency: Monthly
Average Maturity: 10.1 Years
Yield to Maturity: 5.10%
30 Day SEC Yield: 5.15%

TFLO – iShares Treasury Floating Rate Bond ETF (MER 0.15%)

Treasury Bonds
Number of Holdings: 8
Distribution Frequency: Monthly
Average Maturity: 0.87 Years
Yield to Maturity: 5.49%
30 Day SEC Yield: 5.19%

GBF – iShares Government/Credit Bond ETF (MER 0.20%)

Government and Corporate Bonds
Number of Holdings: 2665
Distribution Frequency: Monthly
Average Maturity: 8.83 Years
Yield to Maturity: 4.58%
30 Day SEC Yield: 4.30%

I’m speculating here, but Qtrade probably offers these specific ETFs for free because they get a referral fee or kickback from the fund provider. Out of all $0 commission ETFs on Qtrate, a small percentage have low MERs. This makes it difficult for an individual investor to create a low cost diversified index fund using the free ETFs.

Many of the low cost free U.S. listed ETFs are through Vanguard, which is great. Vanguard offers some of the best index ETFs in Canada and the U.S. Unfortunately, all of the free Vanguard ETFs are thematic funds that hold a small number of holdings compared to broad market index funds.

My Wishlist for Qtrade ETFs

While I like the Qtrade platform and some of their free ETFs, I wish they would list more U.S. and Canadian low cost index funds. Qtrade needs to get more competitive in this space. If a Qtrade executive makes their way to my website, below are my recommendations.

Canadian Listed

XIC – iShares Core S&P/TSX Capped Composite Index ETF (MER 0.06%)

The entire Canadian stock market
Underlying Holdings: 232
Largest Holdings: Royal Bank (5.95%), TD Bank(4.97%), Enbridge(3.52%)
Distribution Frequency: Quarterly
Distribution Yield:3.30%

XIU – iShares S&P/TSX 60 Index ETF (MER 0.18)

60 largest Canadian Companies
Underlying Holdings: 60
Largest Holdings: Royal Bank (7.28%), TD Bank(6.17%), Enbridge(4.37%)
Distribution Frequency: Quarterly
12 Month Yield: 3.29%

VCN – VCN Vanguard FTSE Canada All Cap Index ETF (MER 0.05%)

Broad Canadian Equity Index
Underlying Holdings: 179
Largest Holdings: Royal Bank(6.67%), TD Bank(5.28%), Enbridge(3.86%)
Distribution Frequency: Quarterly
Distribution Yield: 3.12%

VEE – Vanguard FTSE Emerging Markets All Cap Index ETF (0.24%)

Underlying Holdings: 5710
China (34%), Taiwan(17.4%), India(16.9%), Brazil(5.7%)
Largest Holding: Taiwan Semiconductor (4.63%)
Distribution Frequency: Quarterly
12 Month Yield – 3.09%

XEF – iShares Core MSCI EAFE IMI Index ETF (0.22%)

Underlying Holdings: 2654
Japan (23.58%), United Kingdom (14.78%), France(10.89%)
Largest Holding: Nestle (1.85%)
Distribution Frequency: Semi-Annual
12 Month Yield – 2.72%

VIU – Vanguard FTSE Developed All Cap ex North America Index ETF (0.23%)

The World outside of North America
Underlying Holdings: 3866
Japan (22.1%), United Kingdom (15%), France(10.3%)
Largest Holding: Nestle (1.8%)
Distribution Frequency: Quarterly
12 Month Yield – 2.58%

VUN – Vanguard U.S. Total Market Index ETF (MER 0.17%)

The entire U.S. stock market (VTI is the U.S. listed equivalent)
Underlying holdings: 3895
Largest holding: Apple(6.22%)
Distribution Frequency: Quarterly
12 Month Yield: 1.21%

XAW – iShares Core MSCI All Country World ex Canada Index ETF (MER 0.22%)

The stock market outside of Canada
Underlying Holdings: 9557
Largest Holding: Apple (4.17%)
Rebalance Frequency: Quarterly
Distribution Frequency: Semi-annual
Distribution Yield: 1.65%

U.S. Listed

VTI – Vanguard Total Stock Market ETF (MER 0.03%)

The entire U.S. stock market
Underlying Holdings: 3895
Largest Holdings: Apple (6.2%),
Distribution Frequency: Quarterly
30 Day SEC Yield: 1.56%

ITOT – iShares Core S&P Total U.S. Stock Market ETF (MER 0.03%)

The entire U.S. stock market
Underlying Holdings: 3303
Largest Holdings: Apple (6.4%),
Distribution Frequency: Quarterly
30 Day SEC Yield: 1.57%

VT – Vanguard Total World Stock ETF (MER 0.07%)

The entire world stock market
Underlying Holdings: 9543
U.S. (62.10%), Europe(17%), Pacific(10.80%), Emerging Markets(9.90%)
Largest Holdings: Apple (3.69%), Microsoft(3.33%)
Distribution Frequency: Quarterly
30 Day SEC Yield: 2.03%

VOO – Vanguard S&P 500 ETF (0.03%)

The 500 largest U.S. companies
Underlying Holdings: 505
Largest Holdings: Apple (7.11%), Microsoft(6.22%)
Distribution Frequency: Quarterly
30 Day SEC Yield: 1.57%

IVV – iShares Core S&P 500 ETF (0.03%)

The 500 largest U.S. companies
Underlying Holdings: 503
Largest Holdings: Apple (7.49%), Microsoft(6.95%)
Distribution Frequency: Quarterly
30 Day SEC Yield: 1.57%

VXUS – Vanguard Total International Stock ETF (MER 0.07%)

Invests in stocks outside of the U.S.
Underlying Holdings: 7972
Largest Holding: Taiwan Semiconductor (1.36%)
Distribution Frequency: Quarterly
Dividend Yield: 2.91%

There are so many great low cost index funds out there. Hopefully, Qtrade will begin offering more free ETFs to its investors.

Wrap Up

Qtrade’s free ETFs are a good place to start for anyone on their investment journey. Any of the iShares All-In-One ETFs are suitable for a core and explore model of investing. The Canadian listed Horizons ETFs (HXT and HXS) both have low MERs and give broad based exposure to U.S. and Canadian equity markets.

If you want to create your own portfolio of index funds using Qtrade, you’ll have to pay the $8.75 commission every time you make a trade. My guess is that Qtrade will eventually begin offering more free ETFs. But until they do, investors will be limited to the free options, paying the $8.75 trading fee, or switching to a platform that offers all ETFs for free.