BEST OF
14 Best Online Brokers for ETF Investing of April 2021
Exchange-traded funds have surged in popularity because they offer investors a simple way to build a diversified portfolio on the cheap. Investors don’t have to search far and wide to invest in these assets: They’re a common offering of both online brokers and robo-advisors.
ETFs trade like individual stocks, so many of the features sought by investors in a stock-trading account are also relevant to ETF investors. Like stocks, many brokers now offer ETFs commission-free. Besides commissions, it’s also important to consider other criteria, including a broker’s fund selection and tools for creating a well-diversified portfolio.
Here are NerdWallet’s picks for best online brokers for every kind of ETF investor, whether you’re looking for a broker with free commissions, the broadest range of ETFs or the best platform to help you build and manage a portfolio. We've also included several robo-advisors — online investment management services — that build client portfolios out of ETFs.
Exchange-traded funds have surged in popularity because they offer investors a simple way to build a diversified portfolio on the cheap. Investors don’t have to search far and wide to invest in these assets: They’re a common offering of both online brokers and robo-advisors.
ETFs trade like individual stocks, so many of the features sought by investors in a stock-trading account are also relevant to ETF investors. Like stocks, many brokers now offer ETFs commission-free. Besides commissions, it’s also important to consider other criteria, including a broker’s fund selection and tools for creating a well-diversified portfolio.
Here are NerdWallet’s picks for best online brokers for every kind of ETF investor, whether you’re looking for a broker with free commissions, the broadest range of ETFs or the best platform to help you build and manage a portfolio. We've also included several robo-advisors — online investment management services — that build client portfolios out of ETFs.
Summary of Best Online Brokers for ETF Investing of April 2021
| Broker | NerdWallet Rating | Commissions | Promotion | Account Minimum | Learn More |
|---|---|---|---|---|---|
Best for Hands-On Investors | $0 per trade | None no promotion available at this time | $0 | on E*TRADE's website | |
Best for Hands-On Investors | $0 per trade | None no promotion available at this time | $0 | on TD Ameritrade's website | |
Best for Hands-On Investors | $0 per trade | Unlimited commission-free online stock, ETF, fixed income, mutual fund, and options trades when you open an account. | $0 | on J.P Morgan's website | |
Best for Hands-On Investors | $1 - $9 per month | Up to $510 in credit to invest with qualifying deposit into taxable account (see terms) | $0 | on Stash's website | |
Best for Hands-On Investors | $0 per trade | None no promotion available at this time | $0 | on Interactive Brokers's website |
Our picks for
Hands-On Investors
on E*TRADE's website
E*TRADE
Fees
per trade
Account Minimum
Promotion
no promotion available at this time
on E*TRADE's website
on TD Ameritrade's website
TD Ameritrade
Fees
per trade
Account Minimum
Promotion
no promotion available at this time
on TD Ameritrade's website
on J.P Morgan's website
J.P. Morgan Self-Directed Investing
Fees
per trade
Account Minimum
Promotion
commission-free online stock, ETF, fixed income, mutual fund, and options trades when you open an account.
on J.P Morgan's website
on Stash's website
Stash
Fees
per month
Account Minimum
Promotion
with qualifying deposit into taxable account (see terms)
on Stash's website
on Interactive Brokers's website
Interactive Brokers IBKR Lite
Fees
per trade
Account Minimum
Promotion
no promotion available at this time
on Interactive Brokers's website
Our picks for
Hands-Off Investors
on Betterment's website
Betterment
Fees
management fee
Account Minimum
Promotion
of free management with a qualifying deposit
on Betterment's website
on Wealthfront's website
Wealthfront
Fees
management fee
Account Minimum
Promotion
amount of assets managed for free
on Wealthfront's website
on Ellevest's website
Ellevest
Fees
per month
Account Minimum
Promotion
with promo code "nerdwallet"
on Ellevest's website
Want to compare more options? Here are our other top picks:
Disclosure: The author held no positions in the aforementioned securities at the time of publication.
Last updated on April 8, 2021
Methodology
NerdWallet’s comprehensive review process evaluates and ranks the largest U.S. brokers and robo-advisors by assets under management, along with emerging industry players, using a multifaceted and iterative approach. Our aim is to provide an independent assessment of providers to help arm you with information to make sound, informed judgements on which ones will best meet your needs.
DATA COLLECTION AND REVIEW PROCESS
We collect data directly from providers, and conduct first-hand testing and observation through provider demonstrations. Our process starts by sending detailed questionnaires to providers to complete. The questionnaires are structured to equally elicit both favorable and unfavorable responses from providers. They are not designed or prepared to produce any predetermined results. The questionnaire answers, combined with product demonstrations, interviews of personnel at the providers and our specialists’ hands-on research, fuel our proprietary assessment process that scores each provider’s performance across more than 20 factors. The final output produces star ratings from poor (one star) to excellent (five stars). Ratings are rounded to the nearest half-star.
RATING FACTORS
Evaluations vary by provider type, but in each case are based upon the weighted averages of factors that include but are not limited to: advisory and account fees, account minimums and types, investment selection, investment expense ratios, trading costs, access to human financial advisors, educational resources and tools, rebalancing and tax minimization options, and customer support including branch access, user-facing technology and mobile platforms.
Each factor can involve evaluating various sub-factors. For instance, when gauging the investment selections offered by robo-advisors, 80% of the score is based on the potential for diversification (how well-diversified a resulting portfolio of investments could be) combined with the availability of specialty portfolios and level of customization for investors. Expense ratios form an additional 10% of the score, and low or no management fee the remaining 10%.
FACTOR WEIGHTINGS
The weighting of each factor is based on our team’s assessment of which features are the most important to consumers and which ones impact the consumer experience in the most meaningful way. The factors considered, and how those factors are weighted, change depending upon the category of providers reviewed.
Provider categories include: Best Brokers for Stock Trading, Best Brokers for Beginners, Best Brokers for Day Trading, Best Brokers for Options Trading, Best Discount Brokers, Best Brokers for Free Trading, Best Investment Apps, Best Brokers for Penny Stocks, Best IRA Brokers, Best Robo-Advisors, Best Financial Advisors, Best Real Estate Platforms, Best Brokers for ETFs and Best Brokers for Mutual Funds.
INFORMATION UPDATES
Writers and editors conduct our broker and robo-advisor reviews on an annual basis but continually make updates throughout the year. We maintain frequent contact with providers and highlight any changes in offerings.
THE REVIEW TEAM
The review team comprises seasoned writers, researchers and editors who cover stocks, bonds, mutual funds, index funds, exchange-traded funds, alternative investments, socially responsible investing, financial advisors, retirement and investment strategy on a daily basis. In addition to NerdWallet, the work of our team members has been published in The New York Times, The Washington Post, Forbes, USA Today, Bloomberg News, Nasdaq, MSN, MarketWatch, Yahoo! Finance and other national and regional media outlets.
The combined expertise of our Investing team is infused into our review process to ensure thoughtful evaluations of provider products and services from the customer perspective. Our writers and editors combine to have more than 70 years of deep experience in finance, ranging from a former Wall Street Journal reporter to a former senior financial advisor at Merrill Lynch.
CONFLICTS OF INTEREST
While NerdWallet does have partnerships with many of the reviewed providers, we manage potential conflicts of interest by maintaining a wall between our content and business operations. This wall is designed to prevent our writers and the review process from being influenced or impacted by our business partnerships. This way, all reviews can provide an unbiased review that serves the interests of our users. For more information, see NerdWallet’s editorial guidelines.
To recap our selections...
NerdWallet's Best Online Brokers for ETF Investing of April 2021
- E*TRADE: Best for Hands-On Investors
- TD Ameritrade: Best for Hands-On Investors
- J.P. Morgan Self-Directed Investing: Best for Hands-On Investors
- Stash: Best for Hands-On Investors
- Interactive Brokers IBKR Lite: Best for Hands-On Investors
- Betterment: Best for Hands-Off Investors
- Wealthfront: Best for Hands-Off Investors
- Ellevest: Best for Hands-Off Investors
- Vanguard: Best for Hands-On Investors
- Ally Invest: Best for Hands-On Investors
- Merrill Edge: Best for Hands-On Investors
- Fidelity: Best for Hands-On Investors
- Charles Schwab: Best for Hands-On Investors
- Schwab Intelligent Portfolios®: Best for Hands-Off Investors
Frequently asked questions
ETFs allow investors to invest in a diversified selection of stocks, bonds or other investments in a single transaction. Like mutual funds, ETFs pool investor money to purchase shares of a number of different investments.
Those investments generally mimic a benchmark, like the S&P 500. ETF investors don’t own the underlying assets in the fund — the ETF provider maintains ownership. Instead, ETF shareholders own a portion of the ETF itself.
ETFs are traded on an exchange, much like an individual stock, which means they can be bought and sold throughout the day. You can read more about ETFs in this explainer: What is an ETF?
All investments carry risk, and ETFs are no exception. But, since ETFs have built-in diversification, similar to mutual funds, risk is generally lower than it is in trading any one company stock or bond. Still, most ETFs mirror an underlying asset or index, which can rise and fall in value depending on market conditions.
Other risks include the liquidity of the fund (that is, how easily you can buy or sell the ETF) and the potential for the fund to close down.
Like any investment, that varies. As with mutual funds, ETF costs come from a couple of different directions.
Because ETFs trade on an exchange, they can be subject to broker stock commissions. But many brokers have eliminated trading commissions, which means you can buy and sell ETFs for free.
As with any fund, ETFs charge an expense ratio to pass the cost of administering the fund on to investors. The expense ratio is an annual fee, expressed as a percentage of your investment: a 1% expense ratio costs $10 a year for every $1,000 you invest in the fund. In general, because ETFs passively track a benchmark, their expenses tend to be lower than what you’d pay for an actively managed mutual fund. Take a look at average fund expense ratios so you know where your ETF stands.
ETFs combine the flexibility of stock trading with the instant diversification of mutual funds. As most ETFs are passively managed — tracking a benchmark index rather than trying to beat market returns — management fees are on average about one-third lower than that of actively traded mutual funds. Costs are transparent, and the value of the fund’s holdings are reported at the end of each day (as opposed to monthly or quarterly for mutual funds).
ETFs often are more tax-efficient than mutual funds because they typically draw lower capital gains taxes. Investors might pay only upon the sale of the ETF, whereas mutual fund investors can incur capital gain taxes throughout the life of the investment.
Most ETFs are passively managed, meaning they try to track an underlying asset, like a basket of stocks like the S&P 500 or a commodity like gold, which may be turnoff for investors who prefer active management. Also, while costs are generally lower for ETFs, they can vary from fund-to-fund (even ETFs tracking the same index).
Like stocks, ETFs are traded on exchanges like the New York Stock Exchange (hence the name, exchange-traded funds). But unlike a stock, which buys assets in one publicly traded company, an ETF tracks an index, a basket of securities, bonds or other assets.
The main difference is in how these funds invest, and how they’re bought and sold. As we noted above, ETFs can be traded throughout the day, leading to the kind of price fluctuations you might see with individual stocks. Mutual funds are typically purchased from fund companies rather than other investors, and are priced once a day after the market has closed.
Though ETFs can be actively managed, most are passive, tracking an index. Many mutual funds are actively managed and employ a professional to pick and choose investments, which can result in higher fees.
Here’s our full comparison of ETFs and mutual funds.
Because they are traded for a share price, you don’t run into the typical mutual fund minimums, which can be $1,000 or more. You can purchase an ETF share for as little as $10 or $20 in some cases. Robo-advisors that use ETFs in their portfolios may even allow you to buy fractional shares — portions of a fund smaller than a single share.
That said, some brokers have account minimums, though there are quite a few options above that do not.
To trade ETFs, you’ll need an account with an online broker. If you don’t have one, you can open one with one of the companies listed above in about 15 minutes — the whole process can typically be done online. Here's the step-by-step of how to open a brokerage account.
Once the account is funded, you can purchase ETFs using their ticker symbol, very similar to the way you’d buy stocks. (Here’s how to narrow your options when investing in ETFs.) You’ll place an order on your broker’s website or online trading platform with the ETF’s ticker, the order type and the number of shares you’d like to purchase. Read our step-by-step guide to buying an ETF.
Yes — if the portfolio owned by the ETF includes equities such dividend-paying stocks (in fact, you can buy ETFs made up only of these kind of assets). These can be paid monthly or on some other time frame, depending on the ETF.
Yes, you can use dividends to acquire more shares in the same ETF, but there may be commissions for reinvesting dividends. Check with your brokerage to learn more.
