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 $1,000 in free trade commissions at TradeKing.


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TD Ameritrade is one of the largest, best-known, and most established brokerage houses in the United States. It offers simple, flat rate commission plan with no surcharges. No-load mutual fund transactions are priced at steep $49.99. However, the firm offers over 2,000 commission free no-load mutual funds, also known as NTF funds, that investors could buy and sell without paying a dime. TD Ameritrade does not charge hidden fees, as well as IRA setup, maintenance and account inactivity fees. The broker provides highly rated customer service and great dividend reinvestment program.

TD Ameritrade provides one of the largest selections of mutual funds - over 13,000 - from all major funds families including American Funds, Fidelity and Vanguard. The broker's website has a very useful screener than scans through all of these funds based on criteria the user selects. These can include Morningstar rating, gross expense ratio, manager tenure, NAV return, and much more. Beyond the screener, TD Ameritrade also offers a wide selection of educational videos on mutual funds. Subjects include how to choose a fund, how to compare one to a model portfolio, and how to use the broker's Premier List of funds.

TD Ameritrade is an excellent choice for investors looking to invest only with one of the largest and most recognizable brokerage houses in the world. Excellent trading, investment research, IRA planning tools and huge offering of mutual funds make TD Ameritrade one of the best brokerages for mutual funds investors.

Read full TD Ameritrade review.

Promotion link:  Trade free for 60 days + get up to $600. TDA


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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


Broker
Review
Broker
Rating
Mutual Funds
Commissions
Account Maintenance,
Inactivity Fees
IRA Setup
and Annual Fees
Tradeking
Tradeking rating

$9.95 $501 $0
Optionsxpress
Optionsxpress rating

$9.95 $0 $0
Firstrade
Firstrade rating

$9.95 $0 $0
Tradestation
Tradestation rating

$14.95 $12001 $35
Interactive Brokers
Interactive Brokers rating

$14.95 $3601 $30
Scottrade
Scottrade rating

$17 $0 $0
Etrade
Etrade rating

$19.99 $0 $0
Merrill Edge
Merrill Edge rating

$19.95 $0 $0
Capital One Investing
Capital One Investing rating

$19.95 $0 $0
Optionshouse
Optionshouse rating

$20 $0 $0
ChoiceTrade
Choicetrade rating

$25 $601 $75
Sogotrade
Sogotrade rating

$25 $0 $30
Vanguard
Vanguard rating

$35 $201 see
WellsTrade
Wellstarde rating

$35 $601 $30
Muriel Siebert
Muriel Siebert rating

$35 $551 $301
USAA Brokerage
USAA rating

$45 $0 $0
TD Ameritrade
TD Ameritrade rating

$49.95 $0 $0
Thinkorswim
Thinkorswim rating

$49.99 $0 $0
Fidelity
Fidelity Investments rating

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

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

Not offered $0 $0
SpeedTrader
Speedtrader rating

Not offered $1201 $60

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


Updated on 4/12/2017.

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