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Best Online Brokers for ETF Investing 2018

March 2, 2018
Brokers, Investing

Exchange-traded funds (ETFs) have surged in popularity because they offer investors a simple way to build a diversified portfolio on the cheap. Luckily, investors don’t have to search far and wide to invest in these assets as they’re a common offering of both online brokers and robo-advisors.

Because ETFs trade like individual stocks, many of the features sought by investors in a stock trading account are also relevant to ETF-focused investors. But because ETFs essentially are mini-mutual funds, it’s important to consider other criteria, including a broker’s fund selection and commission-free offerings.

Here are NerdWallet’s picks for best online brokers for every kind of ETF investor, whether you’re looking for a broker with the broadest range of ETFs, the lowest account minimum, least expensive commissions or the best platform to help you build and manage an ETF portfolio.

Best overall brokers for ETF investors

These online brokers offer the broadest range of high-quality commission-free ETFs, in addition to tools to help investors pick the best ones for a well-rounded portfolio.

This year, Charles Schwab and TD Ameritrade are the best overall brokers for ETF investing, thanks to their robust lineup of ETFs and tools to help investors assemble a top-notch ETF portfolio.

These brokers, who are also among the best brokers for mutual funds,  offer an extensive array of commission-free ETFs (more than 200 at each), among the most of the brokers NerdWallet reviews.

Two tools offered by Charles Schwab are among the standout features that make this broker appealing to ETF investors. First is the company’s ETF Portfolio Builder, which helps investors create a diversified ETF portfolio based on risk tolerance. Second is its quarterly ETF Select List, a list of prescreened ETFs divided by category that makes it easy to identify funds to fill any portfolio gaps.

Don’t be discouraged by the relatively higher trade commission ($6.95) at TD Ameritrade because that may be a moot point with an impressive list of commission-free ETFs (nearly 300). One of TD Ameritrade’s standout features is the Portfolio Planner tool, which helps users create a target asset allocation plan to assemble a properly balanced portfolio of stocks, ETFs, mutual funds and bonds. This makes it easy for investors to identify which assets are the best fit for the strategy. Finally, TD Ameritrade also boasts an impressive investing curriculum on its website, which is suited to investors of all skill levels.

TD Ameritrade edges out Schwab when it comes to required account minimum ($0 versus $1,000, unless Schwab customers sign up for a $100 monthly minimum auto deposit). But short-term investors should be aware of somewhat unusual penalties at TD Ameritrade. If you hold any of the broker’s commission-free ETFs for less than 30 days, you’ll have to shell out a fairly steep $19.99 short-term trading fee. Finally, investors who plan on trading outside of the no-commission offerings will benefit from Schwab’s lower per-trade commission ($4.95).

Best low-cost brokers for ETFs

These brokers offer a large number of commission-free ETFs. 

All you need is enough money in your account to buy a single share to start building your ETF portfolio at these brokers. The Robinhood investing app is the bare-bones choice for commission-free ETF trading. Its no-frills, mobile-only platform offers easy access to all U.S.-listed ETFs.

One important note: When we say no frills, we mean that tools and research are comparatively lacking, even though Robinhood has made strides to improve these features. While you can create watch lists, and access real-time data, Robinhood lacks the robust research reports or analysis software of other brokers and doesn’t offer much in the way of educational resources. The broker supports only individual taxable accounts and not IRAs. But if slashing all fees — annual, inactivity and trading commissions — is your top priority, then Robinhood delivers.

Investors seeking the perks of a full-service broker — a full suite of investing and educational tools as well as support for IRAs and individual accounts — might be happier with our top pick Charles Schwab. The broker gets highlighted again here for its lengthy list of commission-free ETFs and low expense ratios.

Also worth a mention in the low-cost category are two investing apps with extremely low investing minimums that are aimed at new investors who want to add small amounts of money over time:

  • Stash operates like an ETF matchmaker that makes recommendations based on the usual users’ stuff (risk tolerance and goals) as well as their personal interests and values
  • Acorns operates on the “save your spare change” model; it rounds up purchases on linked credit or debit cards and puts the money into a computer-managed ETF portfolio.

The drawback of these apps is that the ETF pickings are slim.

Best online advisors for hands-off ETF investing

These robo-advisors will build a customized portfolio of low-cost ETFs based on your investing goals and risk tolerance. Plus, they’ll keep it balanced and optimized for tax savings.

ETFs are the investment of choice for robo-advisors, which makes these automatic-investing services a one-stop shop for investors who want a customized portfolio built, managed and maintained for them based on their time horizon and appetite for risk. Wealthfront and Betterment — NerdWallet’s top picks overall for best robo-advisors — can ably get the job done for less than it costs to hire an investment manager.

The same rules about keeping fees in check apply to all ETF shoppers, whether you’re looking to hire a robo-advisor or going the DIY route. Expense ratios on ETFs used in Wealthfront portfolios average 0.08%, compared with 0.13% at Betterment.

What you’ll pay in management fees depends on the size of your portfolio. If you have less than $10,000 to invest, Wealthfront is the most cost-effective choice, with no management fee on the first $10,000 and 0.25% on investments exceeding that amount. Betterment has two fee plans ranging from 0.25% to 0.40% per year based on the level of service you want. (See more details about the differences between the two robo-advisors in our Wealthfront vs. Betterment comparison.)

Best online brokers for ETF tools and screeners

These brokers offer useful features that can help investors more easily assemble an ETF-based portfolio.

  • Etrade
    NerdWallet Editor Review
  • Trade Commission $6.95 with volume discounts available
  • Account Minimum $500
  • Promotion 60 days of commission-free trades with qualifying deposit

Vanguard and E-Trade offer a happy middle ground for investors who don’t want to cede complete control over their investing to a robo-advisor but still want some professional guidance. Both brokers offer tools to help investors assemble a risk-appropriate, balanced portfolio of ETFs. (And for those who aren’t ETF purists, the companies will help you include mutual funds and stocks, too.)

E-Trade offers more than 150 commission-free ETFs, compared with Vanguard’s lineup of 1,800. Both cover a mix of equity funds, bond funds, international funds and commodity funds. What’s more, investors won’t have to sacrifice the professional tools and resources necessary to make informed decisions. E-Trade’s analysts produce a quarterly All-Star List to highlight the top no-load funds and ETFs offered. Meanwhile, low-cost investing powerhouse Vanguard offers in-depth expert analysis to help guide investors choose investments.

E-Trade’s My Virtual Advisor tool offers free asset allocation recommendations for investors of self-directed funds, ETFs and stocks. While Vanguard may be famous for its mutual funds, ETF customers reap ongoing savings from its low management expenses. Vanguard also simplifies the selection process, recommending a four-fund portfolio strategy that balances the benefits of diversification with ease of management.

Best online brokers for active ETF traders

These brokers offer robust trading platforms with tools geared toward the active ETF investor. The trade-off: fewer commission-free ETFs than the competition.

Time-sensitive data and timely trade execution are essential tools for active ETF traders. Both Fidelity and Interactive Brokers provide the tools to monitor real-time minute price movements, create alerts and watchlists, and have mobile capabilities to trade on the go.

Interactive Brokers’ Trader Workstation has a good reputation among active, advanced investors with its volatility lab, advanced charting, heat maps of sector and stock performance, and paper trading. Its mutual fund replicator helps users identify ETFs that replicate the performance of a selected mutual fund — a great fee-slashing feature.

All Fidelity customers have access to its comprehensive web, mobile and desktop trading platforms. Its ETF snapshot pages include an impressive number of analyst ratings and access to reports. Those who qualify can access the premium Active Trader Pro (with advanced tools) and Wealth-Lab Pro, an advanced strategy testing tool.

Low commissions are another priority for active traders. Interactive Brokers’ stock and ETF commission structure favors frequent, high-volume traders at just $0.005 per share. There are a $1 minimum trade commission and a 0.5% maximum, with exchange and regulatory fees included. Plus, volume discounts are available.

But this comes at a cost: higher account minimums ($10,000 for a standard account) and an extra charge to access premium features. Fidelity offers no volume trading discount, but outside of its Active Trader Pro platform (which is restricted to customers who trade at least 36 times in a rolling 12-month period), its research and data are free and extensive.

Best online brokers for ETFs: summary

Account minimum
Start investing
Charles Schwab
Chales Schwab
Overall +
low cost
200+ commission-free ETFs
per trade
$100 referral award for first-time clients
$1,000; often waived with automatic monthly transfers of $100 or more
TD Ameritrade
Nearly 300 commission-free ETFs
per trade
$100 to $600 cash bonus, depending on account size
Low cost
Free trading app, desktop version coming this year. Purposely simple.
per trade
Hands-off investing
Offers tax-optimized direct indexing
0.25% of account balance
per year
$10,000 managed free (NerdWallet readers)
Hands-off investing
Goal-setting features guided asset allocation
0.25%-0.40% of account balance
per year
Up to 1 year of free management with minimum deposit


Known for low-cost index funds
$2 to $20 per trade depending on account balance


analyst recommendations
per trade; volume discounts
60 days of commission-free trades with deposit of $10,000 or more
Fidelity Investments
Active ETF traders
Research; Active Trader Pro platform
per trade
300 commission-free trades with deposit of $50,000 or more
$2,500 ($0 for IRAs)
Interactive Brokers
Active ETF traders
Advanced trading tools; volume discounts
$1 per trade minimum;
volume discounts
$10,000 ($5,000 for IRAs)

Learn more about ETFs

How do ETFs work?

ETFs allow investors to invest into 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. Unlike with mutual funds, 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?

How much do ETFs cost?

Like any investment, that varies. But again, as with mutual funds, ETF costs come from a couple different directions.

  • Commissions. Because ETFs trade on an exchange, they’re subject to broker stock commissions. But many brokers — including the ones above — now have a lengthy list of commission-free ETFs that can be traded at no cost. If you’re planning to buy and sell ETFs frequently, make sure the ones you’re interested in are on that list.
  • Expense ratios. 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.

How much money do you need to invest in ETFs?

That’s the beauty of ETFs — not much. 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.

How do you trade ETFs?

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.

» Want more information? Read our step-by-step guide to buying an ETF.

How do you make money on an ETF?

ETFs earn a return through dividends or price appreciation — when the underlying assets go up in value, your investment in the ETF does, too. You may then be able to sell the ETF for a higher price than you paid for it, though we recommend choosing funds you can hold for the long term.

What’s the difference between an ETF and a mutual fund?

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. They also tend to be more tax-efficient. 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.

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