Best Brokers for ETFs

November 27, 2018 — 1:15 PM EST

Since the first exchange-traded fund (ETF) was introduced 25 years ago, they’ve surged in popularity among both individual and institutional investors. Today, these investment vehicles boast more than $3.5 trillion in assets under management in the U.S. alone and over $5 trillion worldwide.

ETFs are popular because they offer an affordable way to build a diversified portfolio. Compared to mutual funds, ETFs have lower expense ratios and are more tax efficient (they tend to create fewer taxable events). ETFs are also easy to buy and sell. They trade much like stocks on regulated exchanges, can be traded on margin, have no short-selling restrictions, and provide intraday trading opportunities and plenty of liquidity.

Interested in making ETFs a part of your portfolio? Here are Investopedia’s top five online brokers for ETF investing, listed in alphabetical order.

Best Brokers for ETFs

 

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  • 250+ commission-free ETFs
  • $4.95 online trades for all other ETFs
  • $1,000 account minimum (waived with automatic $100 monthly deposits)
Open Account

Founded in 1971, the Charles Schwab Corporation is a financial services company that offers online brokerage, investing, advisory and banking solutions for active traders and investors. Schwab’s ETF OneSource is a group of more than 250 commission-free ETFs from 16 providers, including State Street Global Advisors, Invesco and OppenheimerFunds. You’ll pay $4.95 to trade all other ETFs.

Schwab provides plenty of tools designed to help you select the best ETFs for your portfolio, including their ETF Select List and ETF Portfolio Builder, which you can use to create a diversified portfolio of ETFs based on your financial goals, risk tolerance and time horizon. All customers can use Schwab’s platforms for free, regardless of account size or trading activity.

✓  Pros

 

❌  Cons

•  Great selection of commission-free ETFs   •  Educational content is limited and not as well organized as that of competitors
•  Comprehensive analysis from Schwab and third-party independent providers   •  Unlike many of its competitors, Schwab doesn’t offer social sentiment or discussions
•  Website , desktop and mobile platforms automatically sync   •  Mobile quotes require manual refreshing
•  Excellent customer service with live support 24/7    

 

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  • 250+ commission-free ETFs
  • $6.95 online trades for all other ETFs ($4.95 with 30+ trades per quarter)
  • $500 account minimum
Open Account

Founded in 1982, E*TRADE has the distinction of executing the first-ever electronic trade by an individual investor, more than 30 years ago. The company offers more than 250 commission-free ETFs from providers like Invesco, iShares and Vanguard. You’ll pay $6.95 per trade for all other ETFs, or $4.95 if you place at least 30 trades per quarter.

As a full-service financial institution, E*TRADE offers ample tools and resources designed to help you research your own investments, including E*TRADE’s All-Star ETF list, plus an ETF Screener and Prebuilt ETF Portfolios – a tool that helps you pick ETFs based on your investment time frame and risk tolerance.

✓  Pros

 

❌  Cons

•  Offers every ETF sold, with a large selection of commission-free ETFs   •  Higher commissions than many online brokers
•  Numerous ETF-specific tools and resources   •  Above average margin rates
•  24/5 trading on some of today’s most active ETFs   •  Monthly fee to use advanced trading platform unless you make 30+ trades per quarter
•  Simple yet robust mobile app    
•  24/7 phone and live chat support    

 

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  • 265 commission-free ETFs
  • $4.95 online trades for all other ETFs
  • $0 account minimum
Open Account

Founded in 1946, Fidelity offers financial planning and advice, retirement plans, wealth management services, and trading and brokerage services to 27 million individual customers, representing $6.9 trillion in customer assets. You can trade 25 ETFs from Fidelity and 240 from iShares without paying a commission; all other ETFs cost $4.95 per trade.

Fidelity’s ETF Research Center offers ETF/ETP comparisons, expert commentary and research, and a screener that lets you search by dozens of criteria, including volatility, fundamentals, technical, exposures, performance and analyst ratings.

✓  Pros

 

❌  Cons

•  Good selection of commission-free ETFs   •  Must make 36+ trades per year to use pro-level platform
•  Outstanding in-house and third-party research   •  Only two commission-free ETF providers (Fidelity and iShares)
•  ETF Research Center makes it easy to research and analyze ETFs   •  Some research available only to clients who meet certain criteria
•  User-friendly mobile app    

 

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  • 300+ commission-free ETFs
  • $6.95 online trades for all other ETFs
  • $0 account minimum

Open Account

 

TD Ameritrade has been in business for more than 40 years and has earned industry recognition for its trading platforms, investment offerings and trading tools. The company offers 300+ commission-free ETFs from providers like Invesco, iShares and State Street Global Advisors. You’ll pay a $6.95 flat-rate commission on all other online ETF trades. 

TD Ameritrade offers free access to all its trading platforms, including the pro-level thinkorswim platform and two mobile apps. Customers have access to a good selection of educational content, including articles, videos and in-person events at one of 364 branch locations throughout the U.S.

✓  Pros

 

❌  Cons

 
•  Large selection of commission-free ETFs   •  Above average ETF commissions and pricey broker-assisted trades  
•  24/5 trading on select ETFs   •  Above average margin rates at most dollar levels  
•  Free access to all trading platforms, real-time streaming quotes and Level II quotes   •  Two mobile apps – one for casual investors and one for active traders – can be confusing  
•  Well-organized educational content      
•  ETF Market Center provides a one-stop shop for ETF tools and commentary      
       

 

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  • About 1,800 commission-free ETFs
  • $7.00 online trades for all other ETFs
  • $0 account minimum
Open Account

Founded in 1975, Vanguard is one of the world’s largest investment companies, with more than $5.1 trillion in assets under management. It’s the world’s largest provider of mutual funds and second-largest provider of ETFs (after BlackRock’s iShares), and is well-known for its below-average expense ratios. The company offers an impressive 1,800 commission-free ETFs (that’s about 90% of all ETFs out there) from more than 100 providers. You’ll pay $7.00 to trade all other ETFs.

Vanguard’s selection of commission-free ETFs and its low expense ratios can’t be beat. The company offers an online trading platform, but it’s very basic and not well suited for active traders or anyone who wants advanced charting capabilities. Still, if you want to invest in low-cost ETFs and don’t need a robust platform, or if you’d like an advisor to do the legwork, Vanguard might be a good fit.

✓  Pros

 

❌  Cons

•  Commission-free trading on about 1,800 ETFs   •  Account service fee if total Vanguard assets are less than $10,000
•  In-depth expert analysis   •  Bare bones platform is not suitable for active traders or charting gurus
•  Notoriously low management expenses   •  Website can be challenging to navigate
•  Low-cost Personal Advisor Services