Best ETF Brokerage Firms

Best brokerage companies for ETFs (exchange traded funds) investing. Online brokers with lowest ETF commissions and fees in 2016.

OptionsHouse ETF Commission

$4.95 flat-rate per trade (even for broker assisted trades)

OptionsHouse Advantages

  • Very low commissions
  • Free streaming quotes
  • No fee IRA accounts
  • No volume requirements, or maintenance or inactivity fees
  • Free check-writing privileges
  • Free DRIPs/dividend reinvestment (complete, non-fractional shares only)
  • No surcharges on large orders or extended hours trading
  • Low margin rates
  • Free virtual trading

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Trade Free For 60 Days when you Open a New OptionsHouse Account.

TradeKing ETF Commission

$4.95 per trade

TradeKing Advantages

  • Very low commissions
  • No minimums, or maintenance or hidden fees
  • Free real-time quotes
  • Top-rated customer service
  • Best online investor community
  • Fee-free IRAs
  • Free DRIPs (dividend reinvestment plans)
  • Extensive educational resources
  • Low cost professional portfolio management

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Open TradeKing Account

Get $100 in free commissions. No hidden fees. No minimums.

Best ETF Brokers

For investors who primarily trade Exchange Traded Funds, there are several companies that offer the lowest broker commissions on ETFs investing. The attraction of ETFs is that one can select an ETF that represents a stock index such as the S&P 500, commodities such as gold, oil or sliver, and even a stock sector like biotech. It saves the investor from having to select a specific stock and minimizes the company risk associated with single stock investments. The ETF world has grown considerably, and there are now options that multiply returns (and losses) by 100-200%.

Since some traders like to use ETFs for shorter time frames, commissions are an important factor when selecting an ETF broker. The lowest ETF commissions brokers are OptionsHouse and TradeKing. An examination of these brokers’ commissions and services reveals a few differences to consider.


The commission at OptionsHouse is $4.95 per trade, even if a broker assists with the trade. That is a nice feature, where some large brokers may charge up to $40 to include a broker in the trade. This, combined with no account maintenance or inactivity fees, as well as powerful trading tools makes this discounter one of the best brokers for ETFs. One is limited in the areas of research and education, but that may be a low priority for ETF investors. There is an additional fee $0.005 per share for trading equities priced under $2, but most exchange traded funds are above that threshold so it would not apply.


TradeKing’s ETF commission is $4.95 per trade, with an additional fee of $0.01 per share if the share price is less than $2. They do charge an inactivity fee of $50 (accounts under $2,500 that didn't make a single trade in a year), but don’t have account minimums or maintenance fees. TradeKing offers excellent trading tools, educational resources and online community, so a trader does receive more value for their commissions spent on trading.

OptionsHouse or TradeKing?

As with most broker choices, exchange traded funds traders will have to make a selection based more on the services offered by each, rather than significant differences in commissions. For both of these top ETF brokers trades placed for ETFs over $2 will all carry the same commission cost. Therefore if you want the best trading tools then we recommend Optionshouse. If having access to trader community is important then TradeKing is your broker.

Promotion Offers

TradeKing promotion: Get $100 in free commissions. No hidden fees. No minimums.

OptionHouse promotion: Trade Free For 60 Days when you Open a New OptionsHouse Account.

What are ETFs?

Exchange-traded funds (ETFs) are an attractive option for many investors. First introduced to the markets in 1993, ETFs combine the diversification benefits of mutual funds and the flexibility of individual stock ownership with lower fees and favorable tax treatment. These attributes have made ETFs a popular investment choice; currently, almost a trillion dollars have been invested in ETFs worldwide.

Why have ETFs become so popular? The answer is rather straightforward – because an ETF is basically a mutual fund that trades like a stock. ETFs have many similarities with the traditional mutual funds familiar to most investors. As its name implies, ETFs typically focus on holding large “baskets” of stocks that are listed on a specific securities exchange such as the S&P 500. Individual investors purchase interests in ETFs from large financial institution (ETF broker), which act as “middlemen” with the ETF. This ability to diversify is attractive to many investors because it mitigates the risks inherent in holding a smaller portfolio.

How Do ETFs Work?

The ETFs goal, much like a mutual fund, is to replicate the performance of the exchange or index. For example, one of the largest ETFs by market capitalization is Standard & Poor Deposit Receipts (SPDR). SPDR’s objective is to match the performance of the S&P 500 index for its investors.

In recent years, ETFs have evolved to include “exchanges” other than large market indexes. Today’s investor can participate in ETFs that hold commodities (such as gold, oil and agricultural products), bonds and even currencies.

How are ETFs, Stocks and Mutual Funds Different?

With all of these similarities, what makes ETFs different than mutual funds? The key difference between the two investment vehicles is the ability of the ETF investor to make trades throughout the day, while mutual funds generally allow purchase or sale transaction at the end of each business day for the net asset value of its shares. This factor presents a significant advantage for traders seeking to take advantage of intra-day fluctuations.

Essentially, ETFs allow the investor to deploy all of the strategies used with trading individual stock shares, while enjoying the benefits of diversification. Investors can use limit orders (contingent sell orders that are executed only when a defined price threshold is reached), short-selling (borrowing shares from a third party with the intent of returning them at a later date) and optioning (purchasing the right to buy a share in the future at a defined price). This combination of diversification and flexibility gives the investor the best of both worlds.

ETFs have other advantages over mutual funds as well. Because they are typically not actively managed, the fees and costs of ETF share ownership are generally lower than mutual funds; however, standard trading fees apply for executed transactions on the exchange. There are tax benefits as well – the potential capital gains tax liabilities that can be realized from ETF sales are greatly mitigated.

Niche ETFs

As mentioned above, in addition to the traditional “index” ETFs, there are an increasing number of actively managed “niche” ETFs that specialize in particular commodities or market areas. Commodities such as gold, tin, oil, natural gas and agricultural products are the most common and popular niche ETFs offered by ETF brokers.

In 2016, the three largest niche ETFs specialized in gold, silver and natural gas. Other specialized ETFs are available for particular business areas such as health care, national markets and so on. ETFs can provide an attractive option for investors seeking the flexibility of stock trading and the safety of diversification, without the management fees and potential tax liabilities inherent in traditional mutual funds.

The popularity of ETFs in recent years had led to an explosion in available investment choices, from the traditional index-based ETF to specialized ETFs for particular sectors such as precious metals, energy and agricultural products. ETFs are poised to become even more prevalent as many institution that offer employer-based 401(k) retirement plans will soon offer ETFs to plan participants. And, of course, all online investment brokers offer all ETFs for trading.

As with any investment product, there are risks inherent in investing, as investors active in the market over the past ten years can attest. Nevertheless, the advantages of ETFs make it a smart move to consider them when building your investment portfolio.

Updated on 6/28/2016.

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