Firstrade to Start Charging Fees for Mutual Fund Investments
I got this email from Firstrade today, but somehow the date of the message shows February 7, 2007. While the message began with an exciting tone by saying “We are pleased to announce that Firstrade now offers over 10,000 mutual funds,” What it really wants to tell me, as well as all other investors (existing or potential) who have invested or planed to invest with Firtrade, is not a piece of good news:
Starting on April 2, 2007, please be advised of the following changes to our mutual fund policy at Firstrade:
- A $9.95 commission will now apply to No-Load mutual fund trades. This allows us to maintain the lowest mutual fund rate in the online brokerage industry.
- No Transaction Fee (NTF) and Load funds will remain commission free.
- The early redemption period has been decreased from 180 calendar days to 90 calendar days.
Though they still offer No Transaction Fee (NTF) funds, a quick check on what exactly are defined as NTFs shows the choices are very limited. For example, funds from popular fund families such as Dodge & Cox, T. R. Price, and Vanguard all now become No-Load mutual funds, meaning that investors have to pay $9.95 for every transaction. Actually, Firstrade now has 188 fund families in the No-Load category, while only 68 fund families belong to the NTF group.
More than four years ago, when Scottrade started to charge fees to some no-load mutual funds, Firstrade were mentioned by lot of investors as an alternative because of the fee-free mutual fund trading at Firstrade. Now, it seems this also comes to an end. If everybody else in the brokerage industry charges fees for mutual fund trading, we shouldn’t really be surprised to see Firstrade changes course. After all, we have to invest with somebody.
You can find out more about Firstrade in my Firstrade review post.
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