We recognize that we all are living through a particularly volatile time as we deal with this global crisis, and financial markets have also seen unprecedented change, impacting all investors. Our mission has always been to help people make the most informed decisions about how, when and where to invest. Given recent market volatility, and the changes in the online brokerage industry, we are more committed than ever to providing our readers with unbiased and expert reviews of the top investing platforms for investors of all levels, for every kind of market.
To determine the winner in this category, we looked at research capabilities specific to finding the best exchange-traded funds (ETFs) for a customer’s goals and purposes. Top-notch screeners, analyst reports, fundamental and technical data, and the ability to compare ETFs, are components of this award. We also looked for high-quality streaming data and the ability to find ETFs that are optionable. With all the commission cuts that came in the fall of 2019, ETFs trade commission-free at the large majority of online brokers.
Best Online Brokers for ETFs in October 2020:
- Charles Schwab: Best Online Broker for ETFs and Best ETF Screeners
- Interactive Brokers: Best ETF Research
Charles Schwab: Best Online Broker for ETFs and Best ETF Screeners
- Account Minimum: $0
- Fees: Free stock, ETF trading, $0.65 per options contract
Charles Schwab earned two of our three awards in this category. Schwab is a full-service investment firm that offers services and technology to everyone from self-directed active traders to people who want the guidance of a financial advisor. It has a wide variety of platforms from which to choose, as well as full banking capabilities. Of particular note is Schwab’s ETF screener on the StreetSmart Edge platform, which is extremely customizable and can be saved for future re-use.
On StreetSmart Edge, the ETF screener has 150+ screening criteria including asset class, Morningstar category, fund performance, regional exposure, and others.
There are 16 predefined screens for the ETF screener which can be customized according to client needs. Results can be turned into a watchlist or exported. The ETF screener is available to both prospects (pre-login) and clients using StreetSmart Edge.
The StreetSmart Edge platform has several levels of customization and personalization options, and can be set up so that all of the tools you use regularly are at your fingertips.
Schwab does not automatically sweep uninvested cash into a money market fund, and its base interest rate is extremely low.
In contrast to the excellent ETF screener in StreetSmart Edge, the ETF screener on the website is very basic. The mutual fund and fixed income screeners on the web are unattractive and outdated.
If you trade derivatives, most of the tools are on the StreetSmart Edge platform, but equities traders will wind up referring to technology on the standard website.
Interactive Brokers: Best ETF Research
- Account Minimum: $0
- Fees: Maximum $0.005 per share for Pro platform or 1% of trade value, $0 for IBKR Lite
Interactive Brokers primarily serves institutional investors and sophisticated, active traders around the globe. But it continues to introduce new products, educational resources, and services aimed at investors who are not as active. The firm offers an incredible tool for investors looking to switch from mutual funds to ETFs with its mutual fund replicator. This tool helps you find lower-cost exchange-traded funds that are essentially identical to more expensive and less liquid mutual funds.
ETF-focused research includes the market scanner on the Mosaic tool, which lets you specify ETFs as an asset class. You can use a predefined scanner or set up a custom scan. All the capabilities of the Fundamental Explorer can be used to examine ETFs . Additionally, clients have access to AltaVista's proprietary Hedge Finder and ETF Alternative tools to find ETFs that hold a specific stock or similar ETFs, respectively. You can use a sophisticated order type, Beta Hedge order, to use an ETF to offset the market risk inherent in a stock order you are placing. This tool is unique to Interactive Brokers, allowing you to manage the overall risk in your portfolio.
IB’s order execution engine has what could be the smartest order router in the business, as it stays on top of changes in market conditions to re-route all or parts of your order to achieve optimal execution, attain price improvement, and maximize any possible rebate.
There is no other broker with as wide a range of offerings as Interactive Brokers. IB connects clients to 125 markets in 31 countries and enables clients to trade stocks, options, futures, forex, bonds and funds from a single integrated account.
Algorithmic order types include VWAP (volume-weighted average price) and TWAP (time-weighted average price) as well as order types designed to minimize the trader’s impact on the price of a particular stock.
You can only have streaming data on one device at a time. If you log into your mobile app while still logged onto the TWS, you’ll be prompted to turn off streaming data on one of the devices.
The most advanced capabilities are restricted to IBKR Pro clients. All trades generate commissions for that plan. IBKR Lite clients, though they pay no commissions for U.S. equity orders, cannot use the more sophisticated algorithms.
Small or inactive accounts may be subject to maintenance fees or data charges, and interest is not paid on cash unless you have a substantial balance.
Money is flowing out of mutual funds and into ETFs, so we took a focused look at the ways online brokers help clients research and trade this asset class. ETFs offer an affordable way to build a diversified portfolio, thanks to their expense ratios and greater tax efficiency, when compared to mutual funds. ETFs are simple to trade since the transactions take place, much like stocks, on regulated exchanges. ETFs can be traded on margin, have no short-selling restrictions, and provide intraday trading opportunities and plenty of liquidity. A large percentage of ETFs are optionable as well, allowing traders to manage their portfolio risk using derivatives.
Investopedia is dedicated to providing investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on its platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting thousands of data points that we weighed into our star-scoring system.
In addition, every broker we surveyed was required to fill out an extensive survey about all aspects of its platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of its platforms at our offices.
Our best options brokers offer research capabilities specific to finding the best ETFs for a customer’s specific purpose. Top-notch screeners, analyst reports, fundamental and technical data, and the ability to compare ETFs are components of this award. We also looked for high-quality streaming data and the ability to find ETFs that are optionable. With all the commission cuts that came in the fall of 2019, ETFs trade commission-free at the large majority of online brokers.
Our team of industry experts, led by Theresa W. Carey, conducted our reviews and developed this best-in-industry methodology for ranking online investing platforms for users at all levels. Click here to read our full methodology.