American Funds vs TD Ameritrade

American Funds vs Fidelity, Vanguard, Etrade, Charles Schwab, and Firstrade (2024)

American Funds vs Fidelity and Others: Pricing

Broker Fees Stock/ETF
Mutual Fund
Annual IRA
Charles Schwab $0 $49.95 ($0 to sell) 13.575% $0 $0
Fidelity $0 $49.95 13.575% $0 $0
Firstrade $0 $0 13.75% $0 $0
Etrade $0 $19.95 14.2% $0 $0
Vanguard $0 $20 13.75% $20* $20*

American Funds vs Vanguard and Others: Services

Broker Review Cost Investment Products Trading Tools Customer Service Research Overall Rating
Charles Schwab
American Funds

Compare American Funds vs Competitors

American Funds is a family of 33 mutual funds managed by Capital Research and Management. The company does not advertise and shuns publicity, preferring to rely on brokers' recommendations to their clients. With over $1 trillion in assets under management, American Funds is the third largest mutual funds provider behind Fidelity Investments and Vanguard Group.

Etrade and Charles Schwab are the household names, the largest discount brokerage houses in the U.S. The companies are very popular among all investors — from beginners to institutions.


American Funds has an upfront percentage sales charge for certain share classes. If you are interested in buying class “A“ shares, the sales charge will be:

  • $25,000 to $50,000 - 5%
  • $50,000 to $100,000 - 4.5%
  • $100,000 to $250,000 - 3.5%
  • The sales charge will decrease by one percentage point for every two hundred and fifty thousand buys of shares thereafter

Etrade, Charles Schwab and Firstrade are charging $0 per trade commission for stocks and ETFs, which, of course, does not get any better.

Firstrade is the cheapest for mutual fund investors: $0 per transaction. Other companies have a much higher rate of $49.95 for the same trades. Investors can buy American Funds, Fidelity, and Vanguard mutual funds with all American Funds' competitors in this article.

There are thousands of commission-free (NTF program) mutual funds to choose from at the six discount brokerage firms (but not at American Funds). Keep in mind, that Fidelity Investments is charging a $49.95 short-term redemption fee for mutual funds sold less than 60 days after being purchased.


Charles Schwab: $0 commissions + satisfaction guarantee at Charles Schwab.

Firstrade: Get up to $5,000 cash bonus + $200 in ACAT rebate!

ETRADE: Get zero commission on stock and ETF trades.

Vanguard and American Funds: None


Charles Schwab and Fidelity are the best ranking firms in customer service.

All the companies in this review (except Vanguard and American Funds) created easy-to-use, powerful trading tools that will satisfy just about everyone. But only Charles Schwab offers a professional trading platform (ThinkOrSwim) that is a must-have for very active traders as well as for forex and futures trading.

Because Charles Schwab and Firstrade created well-designed, intuitive trading screens, and provide award-winning customer service, we have rated them the Best Online Brokers for Beginners.


Our Recommendations

Beginner Investors: we recommend Firstrade and Charles Schwab.

IRA accounts: Charles Schwab, Fidelity Investments, and Etrade.

Stocks/ETFs Traders: Charles Schwab and Fidelity Investments.

Options Traders: Firstrade and Charles Schwab.

Long Term, Inactive Investors: Charles Schwab, Fidelity Investments, and Etrade.

Mutual Funds Investors: Firstrade and Charles Schwab. Fidelity Investments, and Vanguard if investing mostly in their own families of mutual funds.

Small accounts: All brokers.

American Funds by Capital Group Review

This article will discuss general performance of American Funds products.

In the volatile world of retirement investing, IRA investors often rely on long-term performance to determine the framework of their portfolio. Those seeking long-term growth in their portfolios look to established fund management groups. American Funds has proven to be the answer in the growth sector. Founded in 1931 by Jonathan Bell Lovelace, American Funds has shown to be well above average throughout its life, as multiple funds have posted over 11% lifetime return. With such a pedigree, it is no surprise they are able to bring in some of the best financial management minds in the world. What is even more impressive is that their managers rarely leave. Managers of the AMCAP Fund, a large equity fund offered by American Funds, average over 25 years of tenure with the group. These managers utilize this expertise to build upon the legacy that started 85 years ago. Millions of investors have made the fund manager a staple in their portfolios due to this knowledge advantage.

American Funds Performance

The risky nature of mutual funds often deter investors from taking the leap. The longer the track record of a fund, however, the less risk involved. This is where American Funds shines. The Growth Fund of America has an average return of 13.2% since its conception in 1973. It is a very large family of funds, ranked by Morningstar among the three biggest (joined by Fidelity Investments and Vanguard Group). American Funds’ large equity funds contain nearly half of their assets in the technology and healthcare sectors. It also invests at least 10% of its assets in its top-5 holdings within funds. These top holdings include major corporations such as Oracle Corp, UnitedHealth Group Inc., Netflix, and many more.

American Funds 10-Year Struggle

Although American Funds has a strong track record, the past three, five, and 10-year returns have failed in outpacing even the S&P 500 Composite Index. This has caused great skepticism among financial experts and has made it difficult for investors to justify the high front-load expenses.

Recent Shift in Momentum

In contrast to the recent lackluster performance of the funds, Janet Levaux of ThinkAdvisor published an article in May by citing Morningstar’s fund flow reports. The report indicated American Funds had surpassed Fidelity Investments as the second largest fund family. While Vanguard has a comfortable lead, American Funds’ $5.8 billion increase combined with Fidelity’s free-fall of $28.5 billion has investors regaining confidence in the fund manager (Levaux 2024). Keep in mind, this increase in fund assets comes in a period when active funds as a whole are experiencing a stiff unpopularity among investors. To complement the large equity fund rebound, American Funds has begun to make its mark in the bond market. The Bond Fund of America and Intermediate Bond Fund of America together brought in nearly $550 million in fund assets (Levaux 2024). While not yet returning to pre-2008 form, American Funds has made a statement that it remains as a leading active-fund manager.

American Funds High Expenses/Fees

A huge deterrent for many investors considering American Funds is its high cost. When simply examining expense ratio, funds such as AMCAP and Growth Fund of America have ratios much lower than the average in this category. However, active funds are often “loaded”, meaning there is either a front-end (or back-end) “load”, or fee, assessed. American Funds is no exception, charging a front-end load of nearly 6%. In the past, the prominent fund family has been able to highlight the performance of their funds as justification of the fee. In recent times, beleaguered investors have begun to make the transitions to no-load passive funds.

American Funds Revenue-Sharing

Additionally, it should not go unmentioned the controversy surrounding American Funds in the last few years. It has been discovered they established “preferred partnerships” with advising firms, Edward Jones in particular, providing incentive to market certain funds to the advisors’ clients. While this does much to push the American Funds brand and funds to investors utilizing planners and advisors, it brings about fiduciary and ethical concerns regarding their role. Despite these concerns, they maintain an overall high level of satisfaction among its investors based on the surge of asset funds.

Verdict: Shaky as of Late, Still A Top Family of Mutual Funds

Many critics of American Funds are quick to point out the more recent 10-year subpar performance. They perceive this “omen” as an indication the long-tenured group of funds – and active funds in general – has finally run its course. Being embroiled in the revenue-sharing controversy has certainly done little to improve its public image. While the recent dip in performance combined with its high fees do warrant careful consideration, one must remember that mutual funds are volatile and designed for long-term investors. It remains a top-tier option in the realm of large blend funds. Choosing a large equity fund from the American Funds family for the long-term (20-plus years) could potentially bring investors one of the highest returns in the industry. Their unique focus on active management and knack for performing at a high level over longer periods ensures American Funds does not plan on fading away anytime soon.

About the Author
Chad Morris is a financial writer with more than 20 years experience as both an English teacher and an avid trader. When he isn’t writing expert content for, Chad can usually be found managing his portfolio or building a new home computer.