The best brokers for ETFs are listed in this article.
ETFs have multiplied in number as they have grown in popularity.
Exchange-traded funds, or ETFs, are becoming a more popular option for investors who want to gain exposure to the high returns of the stock market without taking a chance on the potential downside of individual stocks.
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What is an ETF?
ETF stands for exchange-traded fund. ETFs trade on public exchanges like stocks, giving them the same liquidity and trading opportunities as mutual funds, which are only priced once a day based on their net asset value.
However, ETFs are funds that invest in dozens or hundreds of stocks, commodities, and/or other securities at once, as opposed to just one stock, giving investors the opportunity to achieve significant diversification in a single fell swoop. Actively managed funds and ETFs based on indexes are the two types of ETFs.
Why Buy ETFs?
ETFs are the ideal option for some people. You may want to buy them for the following reasons:
- Limit risk: Spreading it out by investing in a basket of stocks as opposed to a single stock
- Save time: You can avoid researching the stock of each company separately.
- Lower fees: ETFs generally have low fees, but be sure to check the expense ratio.
- Purchased and sold during market hours: Unlike mutual funds, trading exchange-traded funds (ETFs) is not restricted to after the market closes.
How to Choose an ETF Brokerage
You must open a brokerage account if you decide that investing in ETFs is something you want to do. It can be a little overwhelming with so many options, but both big and small name brokerages offer ETF investing. Before opening an account to invest in ETFs, keep the following in mind:
- Low Commissions: The majority of ETF brokers provide new clients with commission-free trading or other perks. If the brokerage does impose commission, the average rate per trade is typically $5.
- ETF Selection: A wider range is preferable. Over 200 different ETFs are available at some brokerages.
- Research: Finding information about the ETFs that the brokerages offer should be simple. The starting point, goal, plan, and past results are all included in this.
10 Best Brokers for ETFs
Fidelity has expanded its efforts to meet customer needs by hiring over 16,000 new associates and launching new platform offers and tools. For all types of trading, including ETFs, Fidelity has improved their mobile platform. What is most likely is Fidelity’s offer of fractional share trading for ETFs.
Fidelity’s mission today is the same as when it was founded in 1946: to bolster and secure their clients’ financial security. Fidelity manages a variety of asset classes, including mutual funds, ETFs, fixed-income investments, and alternative investments.
The company is not only a major global brokerage. Along with financial planning services, Fidelity offers retirement plans for businesses.
Over the past year, Fidelity has grown significantly, and in order to better serve their customers, they have launched a number of new products.
They debuted Fidelity Managed FidFolios and Fidelity Solo FidFolios, two new digital, direct indexing platforms.
Additionally, Fidelity has updated its collection of mobile apps, giving users the freedom to interact with trading, manage accounts, and more from their mobile devices.
Fidelity also introduced a number of new exchange-traded funds (ETFs) in 2022, including two bond funds that adhere to environmental, social, and governance (ESG) standards, one that tracks businesses that develop cryptocurrency-related technology, and one that is concentrated on the metaverse.
The learning center at Fidelity offers information on ETFs and related topics. Investors can easily identify specific ETFs based on a variety of criteria, including socially responsible investing (SRI) standards, with the help of the customizable ETF screener.
Using the same screener, you can also contrast different ETFs. ETFs may also be assessed using Fidelity’s Research tool, which offers thorough data on risk factors, growth prospects, top holdings, performance, volatility, and other topics. Both Fidelity’s mobile apps and website make the tools simple to use.
One of Fidelity’s 200 investor centers across the country offers clients the chance to speak with an advisor in person for immediate assistance and direction. Fidelity employs over 52,000 people, and their clientele includes over 43 million people as well as 23,000 businesses.
Fidelity reported that 1.5 million new brokerage accounts had been opened as of the first quarter of 2022, with investors between the ages of 18 and 35 opening 42% of these new accounts.
2. Interactive Brokers
The reason Interactive Brokers is the best for ETF research is because their tools and platforms enable both customers and non-customers to access and conduct research on real-time, global market data.
Their ETF scanner is top-notch for looking up financial metrics and market prices for more than 150 international markets in multiple currencies.
For serious investors, Interactive Brokers has a huge advantage due to the sheer size of the markets it covers in any given asset class.
Customers (and even non-customers) can use the extensive platforms and tools provided by Interactive Brokers to do market research and make well-informed investment decisions.
Despite being an incredibly powerful trading platform for all types of securities and markets, Interactive Brokers can be intimidating to novice investors.
However, if you take the time to read through the educational materials that the business has been actively improving, you’ll be able to recognize that IBKR has created one of the most robust platforms in the market for learning about and trading ETFs.
Thomas Peterffy, the Chairman of the Interactive Brokers Group, founded Interactive Brokers as TP & Co in 1978. In order to compete on price, speed, size, diversity of global products, and advanced trading tools, the company has always had as its mission to “Create technology to provide liquidity on better terms.”
Investors can access global market information and services through Interactive Brokers’ wide range of products available in desktop, mobile, and web formats. IBKR GlobalAnalyst, a tool created by Interactive Brokers in 2021, allows investors to research global financial metrics and evaluate various investments in order to build a diversified global portfolio.
Investors can now access cryptocurrency markets using any IBKR trading tool thanks to Interactive Brokers’ introduction of direct cryptocurrency investing through Paxos Trust Company in September 2021.
Interactive Brokers had 1.95 million client accounts as of August 1, 2022.
3. Charles Schwab
Due to their wide range of trading platforms and tools, their effective ETF screening tool, and the direct access their customers have to their accounts via Schwab.com or the Schwab Mobile app, Charles Schwab is the best broker for ETF screeners.
Making informed investment decisions is simple for investors thanks to Charles Schwab’s excellent screener and real-time market research data provided for their clients.
Customers can access their accounts using the powerful ETF screening tool from Charles Schwab, a variety of trading platforms and tools, and flexible digital platforms.
Chuck Schwab and his partners established Charles Schwab as First Commander Corporation in April 1971. In 1973, the name of the business was changed to Charles Schwab & Co., Inc.
The company’s “Through Clients’ Eyes” guiding principle has always been to prioritize the needs of the customer while outperforming the competition in terms of value and customer experiences.
A new cryptocurrency ETF called the Schwab Crypto Thematic ETF (STCE)was introduced by Schwab Asset Management in July 2022..
The lowest-cost crypto ETF at the moment is STCE, which has an annual operating expense ratio of 0.30%.
The Schwab Ariel ESG ETF, the first ESG fund and the first active ETF for the company, was introduced in 2021 as Charles Schwab increased its focus on socially conscious investments.
To increase system accessibility, strengthen information security, and facilitate customer transactions, Charles Schwab plans to invest more than $2 billion.
Customers of Charles Schwab have access to a robo-advisor-based automated investing tool known as Schwab Intelligent Portfolios. Customers can also contact a Schwab investment professional for live assistance any time of the day or night.
Charles Schwab managed $6.83 trillion in client assets as of June 30, 2022, and it had $546.4 billion in in-house mutual funds and exchange-traded funds (ETFs).
Customers can use the Schwab Mobile app around-the-clock to manage and monitor their accounts, execute trades, cash checks, and do a variety of other things. The app has an intelligent assistant called Schwab Assistant that enables users to make trades, set alerts, find answers to their questions, and more using voice commands.
The crypto investing platform offered by eToro, which enables users to create portfolios in this developing market, is well known. However, the platform also enables users to buy stocks and ETFs.
When you create an account with eToro and register, you can:
- Invest in whole or fractional shares of stock, including ETFs.
- Speak to actual, knowledgeable investors
- Mix up your stock/ETF and cryptocurrency holdings
- Review the technical analyses and in-depth price charts.
- Pay no commissions
For more information, get in touch with customer service, or start building your portfolio on eToro right away. Greater wealth results from diversification, especially since ETFs give you the security you require in unstable times.
5. TD Ameritrade
Presently, TD Ameritrade provides more than 300 commission-free ETFs. Similar to E-Trade, TD Ameritrade’s ETFs are paired with Morningstar research to help investors make the best choices.
On one simple page, you can find the last price, the current price change, the gross expense ratio, the net expense ratio, and the ratings. Some of the well-known ETFs that TD Ameritrade offers include iShares, Wisdom Tree, and First Trust.
One of Benzinga’s preferred online brokers is TD Ameritrade. It is renowned for its fantastic trading platform, cutting-edge technology, and top-notch customer service.
Anyone interested in trading ETFs will find TradeStation to be a valuable option because it offers more than 2,000 commission-free ETFs.
The platform of TradeStation makes use of cutting-edge trading technology for American individual traders who are both active and passive. You can spot opportunities and take advantage of them by using the fully customizable market monitoring, charting, and analysis tools in TradeStation.
Additionally, TradeStation has a fantastic mobile platform that investors can access on an iOS or Android device. Real-time synchronization between your mobile and online accounts is automatic.
E*TRADE provides over 250 commission-free ETFs, including some of the most well-liked ETFs among traders, just like its rivals. Additionally, E*TRADE makes researching ETFs simple. On one simple website, their extensive list of ETFs tracks historical data from ETFs in numerous asset classes.
Additionally, quotes are only delayed by about 15 minutes, making the data genuinely useful.
E*TRADE charges $6.95 per ETF trade for trading in ETFs that aren’t commission-free. If you want to trade outside of the free ETFs, keep in mind that this rate is a few dollars higher than their rivals’.
8. Vanguard Group
The best-known aspect of Vanguard, which launched its first ETF in 2001 and manages trillions of dollars’ worth of assets globally, is that it offers inexpensive mutual funds.
By making roughly 90% of all ETFs on its platform commission-free in 2018, this dominant player expanded the possibilities for retail investing. Investors can trade any ETF right now without paying a penny.
Vanguard provides screening tools to help investors sort through all of those ETF choices. These tools let investors compare ETFs based on a variety of criteria, including expense ratios, management style (active vs. passive), average annual return, and many others.
Also available at no additional cost is having a Vanguard representative place the trade for you. After choosing your funds, use Vanguard’s planning tools to assist you in putting together a sound financial strategy.
9. Merrill Edge
Merrill Edge offers zero commissions on trades to attract investors to the ETF market, and its Select ETFs screener streamlines the research process. This is especially true if you know the fund size, asset class (stocks or bonds), and investing approach you prefer (value, growth, blend).
The screener can help you quickly fill a specific box if you’re looking for, say, large American growth companies. Although you are free to buy any ETFs offered on Merrill’s platform, it frequently recommends iShares and Vanguard funds.
In order to find a wider range of ETFs, you can use predefined screens, such as those for Morningstar 5-star stocks.
These screens don’t immediately return as much information about the fund, but if you click through, you’ll find detailed information, including the fund’s top holdings, performance, ratings, and key statistics, all laid out in an easy-to-digest format.
10. Ally Invest
Initially, Ally Invest wasn’t exactly a market leader for commission-free ETFs. However, the broker now provides a ton of them, including iShares and Vanguard funds, to name just a few, as a result of the significant shift in the industry toward no commissions.
You can use Ally’s screener to look for funds using predefined filters, such as tech ETFs or S&P 500 index funds. Additionally, you will receive information on each fund’s performance, Morningstar ratings, and top holdings.
If you already use the highly regarded Ally Bank and want to quickly and easily extend your relationship to its sister brokerage, Ally is a great choice.
What distinguishes an ETF from a mutual fund?
The primary distinction between an ETF and a mutual fund is that an ETF can be bought and sold at any time during the trading day, much like an individual stock, whereas a mutual fund is valued based on its net asset value at the end of the day. ETFs are therefore more liquid than mutual funds.
What distinguishes an ETF from a stock?
While stocks and ETFs both trade throughout the day, there are significant differences between the two assets.
A stock represents a stake in a single company, whereas an ETF typically holds a collection of stocks or other assets that give investors access to a particular market index, industry, or region.
Should I pick actively or passively managed ETFs?
You can buy ETFs that give you the option of pursuing a variety of different investment strategies. Investing in ETFs that track an index, such as the S&P 500, and have minimal fees are considered passive strategies.
Active management involves choosing businesses, industries, or regions that a portfolio manager believes will outperform a market index over time.
Passive strategies, on average, have been shown to outperform active management in this regard. However, some active managers have consistently outperformed passive benchmarks.
Are there minimum investment requirements for ETFs?
ETFs typically have no minimum investment requirements other than the cost of a share and any applicable fees or commissions. Compared to mutual funds, which frequently have investment minimums of a few thousand dollars, this is a benefit.
Are ETFs subject to taxation?
Yes, unless the profits come from tax-advantaged accounts like a 401(k) or an IRA, you will likely need to pay capital gains taxes on any profits you make from ETFs.
What are inverse and leveraged ETFs?
A leveraged ETF is intended to offer a magnified return on a benchmark index, typically two or three times the index’s daily performance.
A 2X S&P 500 index ETF, for instance, should increase by 4% on a day when the index increases by 2%, while a 3X fund should increase by 6% on the same day.
Even the best leveraged ETFs carry a high level of risk despite the potential for high returns.
A benchmark index’s opposite return is what an inverse ETF is intended to deliver. For instance, when the index falls by 3%, an inverse S&P 500 index ETF should increase by 3%. Likely, the inverse ETF will decrease if the index increases.
Leveraged and inverse exchange-traded funds (ETFs) carry a higher risk than standard ETFs because of how they produce these kinds of performances.
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