eToro moves into ASX stock trading: How does it stack up?

Social trading platform eToro has expanded its ASX offering with $0 brokerage starting from today.

One of Australia's leading share trading platforms has announced investors can now trade Australian shares directly through the broker, which before just had an ASX CFD offering.

eToro says it is joining the $0 brokerage club on Aussie shares, having previously offered them globally.

In a statement, eToro confirmed it will allow investors to buy and sell shares starting from $US50.

eToro's managing director Robert Francis said offering low-cost options will help empower investors to build their knowledge and wealth through financial markets.

"Offering commission-free stocks is a key part of that mission as it significantly lowers the barriers to entry," he said in a statement.

"We are happy to announce that we have expanded our commission-free stocks by including ASX stocks to support the 68% of Australian retail investors who, according to our research, plan to invest in domestic equities in the first quarter of 2023."

The launch comes in the same week that key rival Stake is lifting its fees.

How does eToro's offering compare?

Unsurprisingly, eToro's offering is pretty competitive.

After all, it is coming to market with a $0 brokerage deal. And while that doesn't mean you'll pay nothing, it does mean it's cheap at least from a brokerage perspective.

According to Finder's database, eToro is the first broker to offer $0 brokerage on all Australian trades. While others have run specials and the likes of CMC Markets offer $0 brokerage on the first trade under $1,000, this is is the first without any caveats.

While it is a strong offering, eToro isn't alone when it comes to offering Aussies cheap brokerage, especially if you're looking to buy US shares.

Although signing up to a brokerage, you might want to consider more than just fees. Investors might want to keep an eye out for trading features, a range of products and educational resources depending on their individual needs.

So how does eToro make money?

Now you might be wondering how it makes money if it isn't charging brokerage fees.

Basically it's charging other fees on other products.

So while you can get $0 brokerage on trades, if you were to buy US or global stocks for example you would have to pay eToro a foreign exchange fee. Same for if you use its other services such as CFDs or cryptocurrency.

eToro launches as investors look to buy the dip

eToro said the timing could be beneficial as Aussies look to buy the dip created by the bear market.

"The bear market in 2022 did not discourage Aussie retail investors, with over a third (40%) displaying confidence in their long-term strategies and not being worried about short-term volatility," it said.

Instead it said the cyclicality experienced last year also increased Aussies' investment appetite (19%) and was a great learning experience, with 1 in 4 (21%) saying it helped them improve their investing approach.

"Today, retail investors are a sophisticated community that wants to take part in AGMs, consider ESG as part of their investment strategies and has a long-term outlook, holding steady or repositioning towards more defensive assets during market downturns," Francis said.

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