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11 Best Brokers for Mutual Funds 2020

Kevin VoigtJanuary 2, 2020

At NerdWallet, we strive to help you make financial decisions with confidence. To do this, many or all of the products featured here are from our partners. However, this doesn’t influence our evaluations. Our opinions are our own.

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.

Merrill Edge

on Merrill Edge's website

Merrill Edge

Merrill Edge

Fees

$0

per trade

Account Minimum

$0

Promotion

Up to $600

cash credit with qualifying deposit

on Merrill Edge's website


Promotion

Up to $600

cash credit with qualifying deposit

Why we like it

Merrill Edge offers high-quality customer service, robust research and low fees. Customers of parent company Bank of America will love the seamless, thoughtful integration, with a single login to access both accounts.

Pros

  • Robust third-party research.

  • Integrated with Bank of America.

Cons

  • Minimum balance requirement for active-trading platform.

Read Full Review
TD Ameritrade

on TD Ameritrade's website

TD Ameritrade

TD Ameritrade

Fees

$0

per trade

Account Minimum

$0

Promotion

Up to $600

cash credit with qualifying deposit

on TD Ameritrade's website


Promotion

Up to $600

cash credit with qualifying deposit

Why we like it

TD Ameritrade meets the needs of both active traders and beginner investors with quality trading platforms, $0 commissions on online stock, options and ETF trades and a large selection of mutual funds.

Pros

  • Commission-free stock, ETF and options trades.

  • Free research.

  • High-quality trading platforms.

  • No account minimum.

  • Good customer support.

  • Large investment selection.

Cons

  • Costly broker-assisted trades.

Read Full Review
E*Trade

on E*Trade's website

E*Trade

E*Trade

Fees

$0

per trade

Account Minimum

$0

Promotion

$100 to $2,500

cash credit with a qualifying deposit

on E*Trade's website


Promotion

$100 to $2,500

cash credit with a qualifying deposit

Why we like it

E-Trade has long been one of the most popular online brokers. The company's $0 commissions and strong trading platforms appeal to active traders, while beginner investors benefit from a large library of educational resources.

Pros

  • Easy-to-use tools.

  • Large investment selection.

  • Excellent customer support.

  • Access to extensive research.

  • Advanced mobile app.

  • Commission-free stock, options and ETF trades.

Cons

  • Website can be difficult to navigate.

Read Full Review

Our pick for

Hands-Off Investors

For people who want to invest in mutual funds but don’t want to pick specific funds or spend time managing their portfolio, a robo-advisor is a natural, inexpensive choice. Robo-advisors will build and manage a portfolio for you. Here are our top picks for investors who want a managed mutual fund portfolio:

Ellevest

on Ellevest's website

Ellevest

Ellevest

Fees

0.25%

management fee

Account Minimum

$0

Promotion

Up to $750

cash bonus with qualifying deposit

on Ellevest's website


Promotion

Up to $750

cash bonus with qualifying deposit

Why we like it

This advisor markets itself to women and takes a goal-focused approach that factors in women’s lower incomes, lifetime earnings and longer lifespans. With its $0 account minimum, competitive advisory fees (ranging from 0.25% - 0.5% of assets) and unlimited access to financial advisors (Premium clients can talk to CFPs), Ellevest is an appealing choice for investors of any gender.

Pros

  • Low account minimum and fees.

  • Goal-focused investing approach.

  • Portfolio mix that factors women’s needs.

Cons

  • Few accounts supported.

  • No tax-loss harvesting.

Read Full Review

Summary of Best Brokers for Mutual Funds 2020

BrokerCommissionsPromotionAccount MinimumLearn More
Merrill Edge Logo

Merrill Edge

on Merrill Edge's website

$0

per trade

Up to $600

cash credit with qualifying deposit

$0

on Merrill Edge's website

TD Ameritrade Logo

TD Ameritrade

on TD Ameritrade's website

$0

per trade

Up to $600

cash credit with qualifying deposit

$0

on TD Ameritrade's website

E*Trade Logo

E*Trade

on E*Trade's website

$0

per trade

$100 to $2,500

cash credit with a qualifying deposit

$0

on E*Trade's website

Ellevest Logo

Ellevest

on Ellevest's website

0.25%

management fee

Up to $750

cash bonus with qualifying deposit

$0

on Ellevest's website

Vanguard Logo

Vanguard

$0

per trade

None

no promotion available at this time

$0

Read review
Fidelity Logo

Fidelity

$0

per trade

None

No promotion available at this time

$0

Read review
Charles Schwab Logo

Charles Schwab

$0

per trade

None

No promotion at this time

$0

Read review
T. Rowe Price Logo

T. Rowe Price

$19.95

per trade

None

no promotion available at this time

$2,500

Read review
Vanguard Personal Advisor Services Logo

Vanguard Personal Advisor Services

0.30%

management fee

None

no promotion currently offered

$50,000

Read review
Merrill Edge Guided Investing Logo

Merrill Edge Guided Investing

0.45%

management fee

None

no promotion at this time

$5,000

Read review
Firstrade Logo

Firstrade

$0

per trade

Up to $200

in Transfer Fee Rebates

$0

Read review
BrokerCommissionsPromotionAccount MinimumLearn More
Merrill Edge Logo

Merrill Edge

on Merrill Edge's website

$0

per trade

Up to $600

cash credit with qualifying deposit

$0

on Merrill Edge's website

TD Ameritrade Logo

TD Ameritrade

on TD Ameritrade's website

$0

per trade

Up to $600

cash credit with qualifying deposit

$0

on TD Ameritrade's website

E*Trade Logo

E*Trade

on E*Trade's website

$0

per trade

$100 to $2,500

cash credit with a qualifying deposit

$0

on E*Trade's website

Ellevest Logo

Ellevest

on Ellevest's website

0.25%

management fee

Up to $750

cash bonus with qualifying deposit

$0

on Ellevest's website

Vanguard Logo

Vanguard

$0

per trade

None

no promotion available at this time

$0

Read review
Fidelity Logo

Fidelity

$0

per trade

None

No promotion available at this time

$0

Read review
Charles Schwab Logo

Charles Schwab

$0

per trade

None

No promotion at this time

$0

Read review
T. Rowe Price Logo

T. Rowe Price

$19.95

per trade

None

no promotion available at this time

$2,500

Read review
Vanguard Personal Advisor Services Logo

Vanguard Personal Advisor Services

0.30%

management fee

None

no promotion currently offered

$50,000

Read review
Merrill Edge Guided Investing Logo

Merrill Edge Guided Investing

0.45%

management fee

None

no promotion at this time

$5,000

Read review
Firstrade Logo

Firstrade

$0

per trade

Up to $200

in Transfer Fee Rebates

$0

Read review

What is a mutual fund?

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.

How much does a mutual fund cost?

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:

  • 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.
  • 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.
  • 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.

How do you invest in mutual funds?

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.

How much money do you need to invest in a mutual fund?

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

How do you make money from a mutual fund?

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.

Last updated on January 2, 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 for Mutual Funds 2020