Best mutual fund brokers

Best Online Brokers For Mutual Funds




Ally Invest, formerly Ally Invest, offers mutual fund investors several major benefits. First is the broker’s handy fund screener. It returns 8,098 products that are available for purchase by new investors. Of these, 1,672 come with no load.

The screener is able to search for funds based on a variety of criteria, including return history, expense ratio, asset class, fund family, minimum investment, dividend yield, manager tenure, and more. Results can be sorted by any of the variables that were used in the search. Buy and sell links are also displayed in a screener’s results.

Clicking on the fund’s name will take you to the fund’s profile page. Here, there is a lot of detailed information about the security. There are fund rankings from Lipper. Most brokers either don’t provide rankings or provide data from Morningstar. So Ally is unique here.

Also available is detailed information on a fund’s holdings, including stocks and sectors. Price performance is shown for each of the top ten holdings. Also shown is the total number of holdings. Fund highlights show load status, dividend ex-date, total assets, and minimum IRA investment. The fund’s turnover rate is also shown.

Ally has kept Ally Invest’s pricing on mutual fund trades. Every fund at Ally has either a transaction fee or a load. If a fund has a load, there is no transaction fee. If a fund doesn’t have a load, the broker charges $9.95 for both purchases and sales - the lowest mutual fund commission among online brokers. Ally Invest is one of the very few brokers in the industry not to charge a short-term redemption fee when a fund is sold soon after purchase.

Compared to other brokers, Ally Invest beats most of them in the mutual fund arena. Its offering of 8,000 funds is larger than Merrill Edge (3,600), but smaller than TD Ameritrade, who has over 11,000. It's mutual fund commission is the lowest in the industry. No redemption fee on selling mutual sets the broker apart from almost all competitors.

In 2017 Ally Invest 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 Ally Invest review.

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TD Ameritrade is one of the top 3 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.

TD Ameritrade provides one of the largest selections of mutual funds - over 13,000. Of these, 3,888 have no transaction fee, and a further 3,714 also carry no load. This selection is one of the largest among on-line discount brokers. WellsTrade customers, for example, have access to less than 10,000 funds in total. Out of this amount, only 2,513 have no load and no transaction fee. Merrill Edge provides only 3,614 funds total, with a paltry 824 carrying no transaction fee and no load.

TD Ameritrade’s mutual fund screener is easy to use and offers several important criteria that can be used to narrow down a fund search. These variables include Morningstar category, socially responsible status, SEC 30-day yield, R-squared, Sharpe ratio, and more. By comparison, it is easier to use than Firstrade’s screener, and it’s easier to find on the site than Vanguard’s.

There are many fund families available to TD Ameritrade clients. The broker’s screener returns funds from Allianz, Voya, American Beacon, BlackRock, American Century, Wells Fargo, JP Morgan Chase, and many others. Sorting through all of these products is fairly simple. A screener’s results can be sorted by all of the input variables mentioned earlier. Convenient buy and sell buttons are also displayed in the results.

TD Ameritrade provides very extensive educational information on mutual funds. Clicking on a fund’s name in a screener’s results produces the fund’s profile page. Here, users will find a wide variety of information, including the fund’s prospectus, most recent NAV, current distribution yield, expense ratio, Morningstar ratings, top ten holdings, and a pdf summary of the fund. A chart of the fund’s performance is available as well. A comparison can be made to the S&P 500, the category average, and an appropriate index.

A fund’s profile page also shows the fund’s category, net assets, and important information on asset allocation. The fund’s loads and fees, if any, are shown in detail. Icons also clearly show if a fund has a load or transaction fee.

There is an educational section on the broker’s website. Information on mutual funds is available here. Resources include individual videos and playlists.

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. Top rated trading, investment research, and IRA planning tools as well as huge offering of mutual funds make TD Ameritrade one of the best brokerages for mutual funds investors.

Read full TD Ameritrade review.

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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 top online brokers. 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: Ally Invest, 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
Ally Invest
Ally Invest 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
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
RobinHood
Robinhood Trading 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 5/17/2017.



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