Best Online Brokers For Mutual Funds

TradeKing is a part of the online banking giant Ally Bank and it is the sixth largest brokerage house in the U.S. The firm does not charge hidden fees, IRA setup, maintenance and account inactivity fees (if account balance is above $2,500). Their mutual fund transaction fee is a rock bottom $9.95 per trade.

TradeKing offers over 12,000 mutual funds, including load and no-load funds from all leading fund families, such as Vanguard and Fidelity. Their funds cover a full range of investment objectives, strategies and asset classes.

TradeKing's Mutual Fund Center tool makes it easy to find top mutual funds performers, to screen funds according to your criteria, and see in-depth breakdowns of mutual fund characteristics.

The firm offers free DRIPs (dividend reinvestment plans) and great customer service. Beginners can place broker-assisted mutual funds trades for the same low price of $9.95, and can learn to trade and pick up investing ideas in the website's friendly user community.

TradeKing is one of the best online brokers for mutual funds investors, beginners as well as for long-term, and buy-and-hold investors.

Read full TradeKing review.

Promotion link:  Get $100 in free commissions. No hidden fees. No minimums.

Open TradeKing Account

Scottrade is one of the largest, best-known, and most established brokerage houses in the United States. It offers simple, flat rate commission plan, which is the cheapest among the five largest brokerage firms. No-load mutual fund transactions are priced at just $17. Compare it to $49.99 charged at TD Ameritrade, $76 to buy (free to sell) at Charles Schwab and $49.95 ($75 for some funds) at Fidelity Investments. Scottrade does not charge hidden fees, as well as IRA setup, maintenance and account inactivity fees. The broker provides highly rated customer service and the best dividend reinvestment program.

Scottrade offers huge selection of over 2,600(!) NTF - free to buy and sell - no load mutual funds. With these funds clients can build a mutual funds portfolio commission-free. The firm provides one of the largest selections of mutual funds - over 14,500 - from all major funds families including American Funds, Fidelity and Vanguard. To help clients pick the best funds, they offer predefined screeners of 4- and 5-star funds rated by Morningstar.

Scottrade is an excellent choice for investors looking to invest only with one of the largest and most recognizable brokerage houses in the world. Low transaction costs and huge offering of mutual funds make Scottrade one of the best brokerages for mutual funds investors.

Read full Scottrade review.

Promotion link:  Get up to $2000 when you open new account or add funds to existing account.

Open Scottrade Account

Mutual Funds at Online Brokers

For many years, investors bought mutual funds through firms that specialized in this type of investment exclusively. But now mutual funds are also included in the menu of investment products offered by online brokers to their customers. If one wishes to have a single account where all of their investments are handled together, such as money market funds, stocks and options, then this may be a way to add mutual fund holdings to the mix.

In that case, commissions could factor into best online broker selection if mutual funds are one’s preferred investment vehicle. Another element to consider is that some brokers are selling their own mutual fund products either alone, or alongside products from other companies.

Commissions for Mutual Funds at the Best Online Brokers

The range of commissions for mutual funds is very wide, and the reasons for the discrepancies are unclear. It is almost as though some brokers want to discourage purchasing mutual funds, since the majority of investors in these products can hold them for long time frames. The result is that the original purchase is the only chance for the broker to earn a commission on that account, if the customer does not trade other instruments such as stocks or options. Other best online brokers offer mutual funds at a minimal commission, perhaps as a way to offer more services to existing customers, or attract new ones.

Of the largest brokers, Scottrade is the lowest commission at $17 with Etrade close behind at $19.99. These two best online brokers do position themselves as discounters, and this pricing follows that model. From there, the price jumps at the other major brokers, with TD Ameritrade charging $49.95, and Fidelity and Schwab hitting the top end at $49.95 ($75 for some funds) and $76 respectively for some types of mutual funds. Obviously, with that commission structure one would not be making many frequent changes to their mutual fund portfolio. Generously, Schwab does not charge a commission to sell a mutual fund holding, but those that do will retain a commission of $100 or more for an investor to have the opportunity to make a gain in any mutual fund product. Fidelity does offer free commissions on its own family of funds as well as other select products.

Least Expensive Commissions for Mutual Funds at Online Brokers

There are three brokers that offer mutual funds commissions for $9.95: Tradeking, Optionxpress, and Firstrade, listed in the order of the broker’s overall rating. These prices are roughly equivalent to stock and ETF commissions, and may appeal to those who are buying small amounts or will be making frequent portfolio adjustments or additions. Interactive Brokers and Tradestation are both at around $15, with Capital One Investing and Merril Edge charging a $19.95 commission.

The $20 price point does seem to be a cut-off for the discount brokers, and the commissions that are higher come from firms that may offer more specialized customer resources and services, or offer advice on selection of the best mutual funds to meet investment goals. This $20 range also represents a rough median for mutual funds commissions from online brokers, and is a fair reference point for the potential investor.

Other Brokers With Mutual Fund Commissions in the Median Range or Higher

ChoiceTrade offer a commission of $25, and slightly higher are WellsTrade and Muriel Siebert who charge $35 per trade. Although their commissions are pricey, the last three also manage to land near the bottom of the broker ratings category.

Vanguard has a range based commission structure that begins at $8 and tops out at $35. USAA Brokerage is near the price point used by the full service online brokers, and has a commission of $45 on mutual funds. This is all the more interesting since the primary funds that USAA promotes and offers are their own brand, although it is possible to buy other major funds from this automobile association broker.

Although there is a significant range in commissions, it is hard to tell what the informed investor receives for their money with the higher priced mutual fund commission structure. However, if the goal is to have one broker that can offer high quality trading in many products and a range of customer support services then it may be worth it to pay the price. Some of the higher ranked brokers have excellent educational resources and trading technologies that may be of benefit to the diversified and active investor. However, if all one wishes to do is buy a mutual fund or two, then selecting a discount broker can get you into the exact same investment for around $10.

Brokers Mutual Funds Pricing Comparison

Mutual Funds
Account Maintenance,
Inactivity Fees
IRA Setup
and Annual Fees

$9.95 $501 $0

$9.95 $0 $0

$9.95 $0 $0

$14.95 $12001 $35
Interactive Brokers

$14.95 $3601 $30

$17 $0 $0

$20 $0 $0

$19.99 $0 $0
Merrill Edge

$19.95 $0 $0
Capital One Investing

$19.95 $0 $0

$25 $601 $75

$25 $0 $30

$35 $201 see

$35 $601 $30
Muriel Siebert

$35 $551 $301
USAA Brokerage

$45 $0 $0
TD Ameritrade

$49.95 $0 $0

$49.99 $0 $0

$49.95 ($75 for some funds) $0 $0
Charles Schwab

$76 ($0 to sell) $0 $0
Motif Investing

Not offered $0 $0

Not offered $1201 $60

1 - fees charged if certain conditions are not met; see brokerage review for the list of fees.

Updated on 9/22/2016.

Please share us with your friends

Copyright ©2009-2016 All rights are reserved. has relationships with other companies. See Terms of Use.