Interested in making ETFs a part of your portfolio? Here are Investopedia’s top five online brokers for ETF investing:
- Charles Schwab
- Fidelity Investments
- TD Ameritrade
- Vanguard
- E*TRADE
Exchange-traded funds (ETFs) offer an affordable way to build a diversified portfolio, thanks to their expense ratios and greater tax efficiency than 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.
Charles Schwab
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- Account Minimum: $0
- Fees: $4.95 per stock and ETF trade, $0 for Schwab ETFs and $4.95 plus $0.65 per contract for options
Schwab’s ETF OneSource is a group of more than 260 commission-free ETFs, increasing to over 500 in March 2019, from 16 providers, including State Street Global Advisors, iShares, Invesco and Oppenheimer.
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.
Charles Schwab also received awards for Best Overall Online Brokers, Best Web Trading Platforms, Best for International Trading, Best for Options Trading, Best for Penny Stocks, Best for Beginners, Best for Roth IRAs, Best for IRAs and Best Stock Trading Apps.
Pros
Access to hundreds of commission-free ETFs from a wide variety of providers
ETF Portfolio Builder helps you build a diversified portfolio quickly
ETF screeners help you find the best funds for your portfolio
Clients can use all of Schwab's platforms and mobile apps for no additional fee
Cons
A plethora of platforms can make tools hard to find
Constant push towards hiring a Schwab financial advisor
Fidelity Investments
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- Account Minimum: $0
- Fees: $4.95 per stock/ETF, $4.95 plus $0.65/contract per options trade
Fidelity offers 265 commission-free ETFs -- 25 from Fidelity itself and 240 from iShares without paying a commission. They will additional ETFs at the end of February 2019. The management fees for the Fidelity ETFs are very low. ETFs not on their no-commission list incur the regular $4.95 transaction fee.
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.
Fidelity also received awards for Best Overall Online Brokers, Best for Beginners, Best Stock Trading Apps, Best for Penny Stocks, Best for Roth IRAs, Best for IRAs, Best for International Trading, and Best Web Trading Platforms.
Pros
Good selection of commission-free ETFs
ETF Research Center makes it easy to research and analyze ETFs
User-friendly mobile app
Cons
Only two commission-free ETF providers (Fidelity and iShares)
Accessing all of the tools Fidelity offers may require a customer to use multiple platforms
No 24/5 ETF trading
TD Ameritrade
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- Account Minimum: $0
- Fees: $6.95 for stock and ETF trades, $6.95 per leg plus $0.75 for options
TD Ameritrade offers more than 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 more than 360 branch locations throughout the U.S.
TD Ameritrade also received awards for Best Overall Online Brokers, Best for Day Trading, Best for Options Trading, Best Web Trading Platforms, Best for Beginners, Best for Roth IRAs, Best for IRAs and Best Stock Trading Apps.
Pros
Large selection of commission-free ETFs
Free access to all trading platforms, real-time streaming quotes and Level II quotes
Well-organized educational content
ETF Market Center provides a one-stop shop for ETF tools and commentary
24/5 trading on select ETFs
Cons
Above average standard commissions and pricey broker-assisted trades
Above average margin rates
Two mobile apps – one for casual investors and one for active traders – can be confusing
Vanguard
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- Account Minimum: $3,000 for most mutual funds
- Fees: $7/stock and ETF trade, $7 plus $1 per contract for options
- Best for: ETF investing
Vanguard is one of the world’s largest investment companies, and is the world’s largest provider of mutual funds and second-largest provider of ETFs (after BlackRock’s iShares). Their offerings are known for sporting below-average expense ratios. The company offers an impressive 1,800 commission-free ETFs from more than 100 providers, which is a huge majority of the funds available. 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
Commission-free trading on about 1,800 ETFs
In-depth expert analysis
Notoriously low management expenses
Low-cost Personal Advisor Services
Cons
Account service fee if total Vanguard assets are less than $10,000
Bare bones platform is not suitable for active traders or charting gurus
Website can be challenging to navigate
E*TRADE
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- Account Minimum: $500
- Fees: $6.95 stock and ETF trading
E*TRADE offers more than 290 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.
E*TRADE also received awards for Best Web Trading Platforms, Best for Options Trading, Best Stock Trading Apps, Best for Roth IRAs, Best for IRAs, and Best for Beginners.
Pros
Offers every ETF sold, with a large selection of commission-free ETFs, with numerous ETF-specific tools and resources
24/5 trading on some very active ETFs, allowing you to respond to after-hours market news
Mobile app watchlists and tools synch up with web-based platform
24/7 phone and live chat support
Cons
Higher commissions than many online brokers unless you trade frequently
Above average margin rates
Like other brokers with multiple platforms and services, you may have to use more than one platform to find all the tools you’d like to use.
Methodology
Investopedia’s mission is to provide investors with unbiased, comprehensive reviews and ratings of online brokers. Our reviews are the result of six months of evaluating all aspects of an online broker’s platform, including the user experience, the quality of trade executions, the products available on their platforms, costs and fees, security, the mobile experience and customer service. We established a rating scale based on our criteria, collecting over 3,000 data points that we weighed into our star scoring system.
In addition, every broker we surveyed was required to fill out a 320-point survey about all aspects of their platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of their platforms at our offices.
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.