Best of
12 Best Brokers and Robo-Advisors for Mutual Funds 2020
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Mutual funds are the investing world’s two-for-one: a single investment product with built-in diversification. They are a great tool for long-term investors who want a diversified portfolio composed of just a handful of investments, versus a long list of individual stocks to keep track of.
Right now is a particularly good time to be a mutual fund investor. Many of the once-pricier players have slashed or completely done away with fund investment minimums. Fidelity has gone so far as to cut management fees to the bone, rolling out a few zero-fee index funds. And the number of no-transaction-fee mutual funds — funds you can invest in without paying any commission whatsoever — continues to grow at many providers.
It’s becoming a tight race to the top for discount brokers and robo-advisors that serve fund investors. All of the providers here offer a range of low-cost funds and resources to effectively manage your portfolio. To help narrow the field, here’s NerdWallet’s roundup of top brokers and robo-advisors for mutual fund investors.
Mutual funds are the investing world’s two-for-one: a single investment product with built-in diversification. They are a great tool for long-term investors who want a diversified portfolio composed of just a handful of investments, versus a long list of individual stocks to keep track of.
Right now is a particularly good time to be a mutual fund investor. Many of the once-pricier players have slashed or completely done away with fund investment minimums. Fidelity has gone so far as to cut management fees to the bone, rolling out a few zero-fee index funds. And the number of no-transaction-fee mutual funds — funds you can invest in without paying any commission whatsoever — continues to grow at many providers.
It’s becoming a tight race to the top for discount brokers and robo-advisors that serve fund investors. All of the providers here offer a range of low-cost funds and resources to effectively manage your portfolio. To help narrow the field, here’s NerdWallet’s roundup of top brokers and robo-advisors for mutual fund investors.
Summary of Best Brokers and Robo-Advisors for Mutual Funds 2020
| Broker | NerdWallet Rating | Commissions | Promotion | Account Minimum | Learn More |
|---|---|---|---|---|---|
Best for Hands-On Investors | $0 per trade | Up to $600 cash credit with qualifying deposit | $0 | on Merrill Edge's website | |
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 Robo-Advisors for Hands-Off Investors | 0.30% management fee | None no promotion available at this time | $50,000 | on Vanguard's website | |
Best for Robo-Advisors for Hands-Off Investors | $1 - $9 per month | 2 months free with promo code "nerdwallet" | $0 | on Ellevest's website |
Our picks for
Hands-On Investors
If you want to pick and choose your own mutual funds, you're probably best suited for an online broker. The brokers here offer a large selection of funds, including a long list of mutual funds that can be bought and sold without transaction fees.
on Merrill Edge's website
Merrill Edge
Fees
per trade
Account Minimum
Promotion
cash credit with qualifying deposit
on Merrill Edge's website
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
Our picks for
Robo-Advisors for Hands-Off Investors
on Vanguard's website
Vanguard Personal Advisor Services
Fees
management fee
Account Minimum
Promotion
no promotion available at this time
on Vanguard's website
on Ellevest's website
Ellevest
Fees
per month
Account Minimum
Promotion
with promo code "nerdwallet"
on Ellevest's website
Our picks for
Hands-On Investors
Firstrade
Fees
per trade
Account Minimum
Promotion
in Transfer Fee Rebates
You Invest by J.P.Morgan
Fees
per trade
Account Minimum
Promotion
when you open and fund a You Invest Trade account with qualifying new money
Want to compare more options? Here are our other top picks:
Last updated on October 17, 2020
Methodology
NerdWallet's ratings for brokers and robo-advisors are weighted averages of several categories, including investment selection, customer support, account fees, account minimum, trading costs and more. Our survey of brokers and robo-advisors includes the largest U.S. providers by assets under management, plus notable and/or emerging players in the industry. Factors we consider, depending on the category, include advisory fees, branch access, user-facing technology, customer service and mobile features. The stars represent ratings from poor (one star) to excellent (five stars). Ratings are rounded to the nearest half-star.
To recap our selections...
NerdWallet's Best Brokers and Robo-Advisors for Mutual Funds 2020
- Merrill Edge: Best for Hands-On Investors
- E*TRADE: Best for Hands-On Investors
- TD Ameritrade: Best for Hands-On Investors
- Vanguard Personal Advisor Services: Best for Robo-Advisors for Hands-Off Investors
- Ellevest: Best for Robo-Advisors for Hands-Off Investors
- Firstrade: Best for Hands-On Investors
- You Invest by J.P.Morgan: Best for Hands-On Investors
- Vanguard: Best for Hands-On Investors
- T. Rowe Price: Best for Hands-On Investors
- Merrill Edge Guided Investing: Best for Robo-Advisors for Hands-Off Investors
- Charles Schwab: Best for Hands-On Investors
- Fidelity: Best for Hands-On Investors
Frequently asked questions
Mutual funds pull together two things — money from multiple investors, and stocks, bonds or other assets. Investors buy shares in the fund, and their money is then pooled to purchase investments that align with the fund’s goal.
For investors, mutual funds are a convenient way to instantly diversify even small amounts of money. You might not be able to afford to purchase a share of each individual investment in a mutual fund — these funds often hold 100 investments or more. Even if you could afford it, buying would take time and incur multiple transaction fees.
Read our full mutual fund explainer for more details.
That depends on the type of mutual fund you choose. Actively managed mutual funds employ a professional to invest and manage the fund’s assets. That costs more than a passively managed fund, such an index fund, which skips the fund manager and instead selects its investments by copying a benchmark, like the S&P 500. An S&P 500 index fund aims to mirror the performance of the benchmark index.
In either case, keeping wealth-eroding fees at bay requires guarding against both high brokerage account fees and the costs that come with mutual funds themselves. There are three common expenses associated with mutual funds:
1. Transaction fees: Charged on the purchase or sale of the fund — and in some cases, on both. Select a broker with a long list of no-transaction-fee mutual funds — like many of the ones we’ve recommended above — to avoid this cost.
2. Early redemption fees: Charged by a broker for selling out of a fund in the first 60 to 90 days. Aim to hold your mutual funds as a long-term investment.
3. Expense ratios: This charge comes from the fund itself. It’s an annual fee that is often higher on actively managed funds than passively managed funds. Expense ratios are expressed as a percentage of your investment: A fund with a 1% expense ratio will cost $10 a year for every $1,000 you invest. You can’t avoid expense ratios, but you can steer your money toward low-cost funds. Familiarizing yourself with the average mutual fund expense ratios will help you recognize if you’re paying too much.
You can buy mutual funds at any online broker or directly through a fund company, such as BlackRock or American Funds. We have some specific instructions about investing in mutual funds to help guide you. In general, online brokers will offer a larger and more diverse fund selection than direct purchase through a fund company.
If you don’t have an individual retirement account or brokerage account, you’ll need to open one. You can do that through any of the brokers mentioned above (here's a step-by-step for how to open a brokerage account). If you have an employer-sponsored retirement plan, such as a 401(k), it likely offers access to a small selection of mutual funds as well.
You’ll generally face two minimums: A brokerage account minimum, which typically falls between $0 and $2,500, and the mutual fund minimum, which may be $1,000 or more. These minimums are combined — if the broker allows you to fund an account with $1,000, you can then invest that money in a mutual fund with a minimum of $1,000.
If that’s too big of an investment, you might consider exchange-traded funds, which are a type of passive mutual fund you can buy for a share price, much like an individual stock. That often means a lower barrier to entry. (Compare Mutual funds vs. ETFs.)
As with any investment, the hope here is that the money you put in will earn a return. Mutual funds earn that return through dividends or interest on the securities in their portfolios or by selling a security that has gone up in value. In both cases, the fund typically passes those returns through to investors.
You also earn a return if the value of the mutual fund itself increases and you sell that fund for more than its purchase price.
