Best online brokers for mutual funds in April 2021

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You know you want to purchase mutual funds to plan for your retirement or another big goal. But deciding where to go to buy these types of funds can feel dizzying.

First things first: Personal finance experts recommend buying the funds directly from the mutual fund company rather than through a brokerage account. Why? You’ll save money on fees. The exception, of course, is if that brokerage account is through the mutual fund company. For example: Buy Fidelity funds from Fidelity Investments and Vanguard funds from The Vanguard Group and so on.

Next, you’ll want to look for what kind of tools the broker makes available — what mutual funds are on its platform, what the broker charges, including early redemption fees, and other factors. On costs, expect to pay a higher expense ratio for actively managed accounts — which are managed by a person or a group of people who are picking the investments and trying to beat the market — versus an index fund, which is built to replicate the performance of a specific market.

Here are the best online brokers for mutual funds:

Overview: Top online brokers for mutual funds in April 2021

Fidelity Investments

Fidelity Investments launched four zero-fee funds in the summer of 2018 — making it the first financial company to offer mutual funds with zero expense ratios in the ongoing price war. The funds are: Fidelity Zero Total Market Index Fund, Fidelity Zero International Index Fund, Fidelity Zero Large Cap Index Fund and Fidelity Zero Extended Market Index Fund. And all Fidelity funds come without transaction fees as long as you hold the fund for at least 60 days.

The Boston-based retirement giant, which has long had a prominent name in the mutual fund space, also offers more than 3,500 no-transaction-fee mutual funds. Using the long-established broker, you’ll get access to a ton of research, screening tools and its namesake mutual funds, such as its iconic Magellan fund. You can also port in all of your financial accounts on its so-called full-view feature to understand all of your finances in one place, much as you might on a budgeting app like Mint.

  • Minimum amount to open an account: $0
  • Standard pricing: Free for Fidelity funds and other non-transaction-fee funds, and $49.95 on the buy and $0 to sell on non-Fidelity transaction-fee funds
  • Mutual fund highlight: Offers four zero-fee index funds, more than 3,400 no-transaction-fee mutual funds

Charles Schwab

Charles Schwab is credited for pioneering low-cost investing in the 1970s, and the company’s pricing remains competitive to this day. At Charles Schwab, you’ll have a wide selection of mutual funds that don’t charge sales commissions — more than 4,200 no-load, no-transaction-fee mutual funds.

However, the fee is steep if you move outside of those funds: The broker typically charges $49.95. Like many rivals, Schwab does not require a minimum to open an account or get started. Schwab’s stellar customer service, robust brokerage platform, and wealth of research make it a solid pick.

  • Minimum amount to open an account: $0
  • Standard pricing: $0 on non-transaction-fee funds; otherwise $49.95 when buying others funds
  • Mutual fund highlight: More than 4,200 no-load, no-transaction-fee mutual funds

E-Trade Financial

E-Trade makes available more than 4,500 no-load, no-transaction-fee mutual funds. That list includes more than 120 Vanguard funds, from one of the low-cost leaders in the space. If you move outside of these no-transaction-fee funds, E-Trade charges a $19.99 commission, a price that falls in the middle of its rivals.

At E-Trade, you’ll also have access to research and tools to help you make investment decisions. E-Trade’s screener will help you quickly find what you’re looking for, with the ability to search funds by expense ratio, performance, yield and many other categories. Click a fund’s link and you’ll get detailed info on it, including its top holdings, costs and annual performance.

  • Minimum amount to open an account: $0
  • Standard pricing: $0 on no-transaction-fee funds, and $19.99 on no-load, transaction-fee funds
  • Mutual fund highlight: More than 4,600 no-load, no-transaction-fee mutual funds

Ally Invest

Ally Invest offers access to more than 12,000 mutual funds. While its standard commission on mutual funds is considerably cheaper than some other competitors, the broker doesn’t offer no-transaction-fee funds. Instead, it charges a flat $9.95 to buy and sell no-load mutual funds, while funds with a sales load can be bought and sold for as cheap as $0.

As a financial institution without branches, Ally focuses a lot of its attention on its digital experience. Ally Invest’s sister brand, Ally Bank, wins many accolades, including Bankrate’s top online bank in 2021. The company is also well regarded for its customer service.

  • Minimum amount to open an account: $0
  • Standard pricing: $9.95 on no-load funds
  • Mutual fund highlight: The mutual fund commission is cheaper than many of its rivals

Vanguard

Formed in 1975, The Vanguard Group has long been celebrated for its low-cost index funds.

Its legendary founder, the late John C. Bogle, is credited with launching the first index fund for retail investors. That fund is now called the Vanguard 500 Index Fund.

As a Vanguard client, you won’t pay transaction fees for any of the 130 Vanguard mutual funds. The firm also offers more than 3,000 no-transaction-fee mutual funds for non-Vanguard funds. You’ll pay $8 to $20 per trade for the other funds available on its platform, though accounts with more than $1 million in Vanguard funds receive their first 25 trades for free.

Even though it is known for index investing, Vanguard also offers actively managed funds.

  • Minimum amount to open a brokerage account: $0
  • Standard pricing: Free for family funds and other no-transaction-fee funds; $0-$20 for others, depending on Vanguard assets
  • Mutual fund highlight: Long regarded for its low-cost index funds

TD Ameritrade

With more than 4,100 mutual funds available without a transaction fee, TD Ameritrade allows investors excellent access to a range of no-cost choices. The broker’s screening tool will help you sift through this wealth of funds, though it’s not as helpful at separating the wheat from the chaff as it could be. However, each fund’s page does offer a comprehensive view of the security, including performance data across multiple periods, top holdings, and other critical fund information.

Still, TD Ameritrade’s premier list screen does help you narrow your focus to low-cost no-fee mutual funds by using Morningstar’s data, which is updated quarterly. If you’re looking for a wide selection of other investment types, TD Ameritrade has you covered, too. Besides the usual run of stocks, bonds, and funds, the broker has futures and forex, for a well-rounded offering.

(Charles Schwab has purchased TD Ameritrade, and will eventually integrate the two companies.)

  • Minimum amount to open a brokerage account: $0
  • Standard pricing: $0 on no-transaction-fee funds and load funds; otherwise, $49.99 for no-load funds
  • Mutual fund highlight: More than 4,100 no-load, no-transaction-fee mutual funds

Interactive Brokers

It can be easy to forget that Interactive Brokers, which typically caters to more advanced traders and professionals, also offers something that’s more popular among regular investors – a whopping 8,300 funds with no transaction fee! That’s among the 34,000 no-load funds offered overall, while the costs for other fee funds is up to $14.95 per trade and international fee funds cost 4.95 euros or the equivalent.

The broker expanded its mutual-fund platform in 2020, and now offers the largest single place for investors to find no-load mutual funds. That’s on top of the ability to trade in 31 countries in a range of asset classes (stocks, bonds, and more), making Interactive Brokers a true “go anywhere” broker.

  • Minimum amount to open a brokerage account: $0
  • Standard pricing: $0 for no-transaction-fee funds; otherwise, 3 percent of purchase value, up to $14.95
  • Mutual fund highlight: More than 8,300 no-transaction-fee mutual funds

Merrill Edge

Merrill Edge offers more than 2,000 no-transaction-fee funds and you’ll be able to sift through these funds with Merrill’s screener or use the Select Funds choices to craft your portfolio from dozens of choices across company size and style. Merrill’s page for each fund clearly lays out its vital statistics, including its Morningstar rating, top holdings and annualized performance.

And you can make your mutual fund investments feel like your 401(k) deductions by using Merrill’s automatic investing plan. Pick your amount and schedule, and you’ll be buying funds without even having to worry about it, and you can change the plan at any time.

  • Minimum amount to open a brokerage account: $0
  • Standard pricing: $0 for no-transaction-fee or load-waived funds; $19.95 for transaction-fee funds
  • Mutual fund highlight: More than 2,400 no-transaction-fee funds

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