Alien ETF Concept - No Fee Purchases at Questrade

For those with small investment portfolios, fees often forced investors into mutual funds in order to get diversification and to avoid erosion of returns from the fees of many small trades for many small holdings.

Free ETF purchases at Questrade now frees investors to purchase a few ETF shares at a time without that erosion.  Questrade says the following regarding limits on fee-free purchase:

"No limits. None. Nada. Zilch. You can buy one ETF or all of them, one share or as many as you’d like. There are no restrictions, no minimum investment amount, no maximum number of ETFs you can buy."

ETFonehome.. "Mom, I saved on trading fees!"
This is an alien concept that can open up new strategies for investors. Of course there is the hassle of making those small purchases.  If you holdings are large enough and provide a DRIP to purchase more shares with distributions then this is not an issue (DRIP purchases are free free already).   But if you are building a position in a different ETF, then free-free ETF purchases will help you get there.

This is an equation given under Portfolio Size for Choosing ETFs over Index Funds:

Size of portfolio for choosing ETFs = Trading commissions / (Higher MER – Lower MER)

An example Sleepy Mini Portfolio analysis showed that a $143,000 portfolio was needed to favour index ETFs over TD eSeries funds, considering $30 a trade.  With Trading Commissions = $0 on the right of the equation, the size of the portfolio on the left drops to $0 too, meaning index ETFs can be cost-effectively selected over index mutual funds for any size.