As investment apps and platforms multiply, many are offering zero commissions as a competitive advantage. In search of cost-effectiveness, many investors rush to these platforms.
However, it usually does not take too much time before they realise that behind the zero commission selling point are multiple fees that tend to add up.
If you are learning how to buy US stocks in the UAE, you need to look beyond the zero commission headline to consider a full cost breakdown. Only then can you be sure you are using a cost-effective investment app.
In this article, we show how this works by considering the fee structure of the lowest-fee investment apps in the UAE.
1. Sarwa
Sarwa is an all-in-one investment platform for UAE residents. It supports passive investing with its Sarwa Invest product and active investing with its Sarwa Trade product.
Commissions
- US Stocks: Commission on US stocks is the higher of $1 or 0.25% of traded value
- ETFs: Higher of $1 or 0.25% of traded value
- Options: 4% per contract
- Cryptos: Competitive spreads
Management fees
For passive investors, the management fee ranges from 0.4% to 0.85%, depending on the account type (Standard, Platinum, Private Wealth, Legacy).
Other fees
- Fund fee (passive portfolios): 0.10-0.20%. ETF providers, not Sarwa, collects this fee.
- Deposit fees (local): Transfers between your local bank account and your brokerage account are free. These transfers take 1-2 days to process. However, there’s an Instant Funding option that costs 0.99% of the deposit.
For debit and credit cards, there is a fee of 2.99% plus AED 1 per transaction.
Sarwa does not charge any extra deposit fees apart from what these networks charge.
- Deposit fees (international): You may incur wire transfer fees on international bank transfers, but Sarwa does not charge any additional fee for these transfers.
For debit and credit cards, there is a fee of 3.99% plus AED 1 per transaction.
Again, Sarwa does not charge any extra deposit fees apart from what these networks charge.
- Withdrawal fees: Withdrawals to local bank accounts are free, while those to international bank accounts will incur wire transfer fees. Sarwa does not charge any extra fee.
- Account inactivity fees: Sarwa does not charge account inactivity fees
- Account opening and closing fees: Sarwa does not charge account opening or closing fees.
- Minimum account balance: There is a $500 minimum account balance requirement on Sarwa Trade and Sarwa Invest (it’s $2,500 for Socially Responsible Investing Portfolios on Sarwa Invest).
2. eToro
eToro is a global investment platform that supports both active and passive investing (through its Smart Portfolios). It is also well known for its social or copy trading product.
Commissions
- US Stocks: $1 or $2
- ETFs: $0
- Cryptos: 0.10%-1%
Management fees
eToro does not charge management fees for Smart Portfolios.
Other fees
- Inactivity fees: An inactivity fee of $10/month applies to accounts that have been dormant for 12 months.
- Account opening or closing fees: Not applicable
- Withdrawal fees: No withdrawal fees for withdrawals from local currency accounts to an external account. Withdrawals from a USD investment account to external accounts cost a fixed $5 fee, which is used to cover the expenses of international money transfers.
- Currency conversion fees: They vary depending on location, payment method, and Club level.
- Crypto transfer fees: A 2% fee also applies when users transfer crypto assets to their eToro Money crypto wallet.
- Minimum account balance: $100 for standard accounts, $500 for Smart Portfolios.
3. Interactive Brokers
Interactive Brokers is a global investment platform that provides access to global markets. It supports only active investing.
Commissions
- US stocks and ETFs: $0 for IBKR Lite accounts, $0.005 for IBKR Pro accounts, and $0.00035-$0.0005 for IBKR Pro-Tiered accounts.
- UAE-listed stocks: 0.10% of traded value for Abu Dhabi Securities Exchange and 0.25% of traded value for Dubai Financial Market.
- Bonds: 0.10% of face value for US bonds
- Mutual funds: 3%
- Commodities: 0.7-0.15%
- Cryptos: 0.12-0.18%
Other fees
- Fund fee: This ranges from 0.09% and 0.65%. Fund fees are collected by ETF providers.
- Currency conversion fees: 0.002%
- Account inactivity fees: Not applicable
- Minimum account balance: $0 for cash accounts
4. StashAway
StashAway is a global investment platform that supports passive investors with a roboadvisory product and active investors with access to ETFs and private market assets.
Commissions
- ETFs: $1.99 per order
Other fees
- Management fees: 0.20-0.80%; a minimum monthly fee
- Account opening and closing fees: Not applicable
- Currency conversion spread: 0.29%
- Fund fee: 2%, charged by ETF providers
- Minimum account balance requirement: Not applicable
5. Saxo Bank
Saxo Bank is a platform where active investors can create portfolios with more than 71,000 financial instruments across the global market.
Commissions
- US stocks and ETFs: 1%
- Mutual funds: Minimum of $10
- Options: $0.75 per lot
- Bonds: 0.05%
Other fees
- Currency conversion fees: Plus or minus 0.50%
- Custody fees (stocks, bonds, ETFs, and ETCs): 0.05%-0.15%
This brief survey has shown that investment cost extends beyond the commission on buy and sell orders.
Only a comprehensive evaluation of all relevant fees will help you choose the most cost effective investment apps in the UAE.
