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Best Brokers for Mutual Funds for September 2022

Many or all of the products here are from our partners that pay us a commission. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.

Getting started as an investor can seem complicated. There's a lot of advice about which stocks to pick, how to balance your portfolio, how to avoid fees and more. But investing can be much simpler than that for most of us.

Mutual funds are a way to invest in the stock market without becoming an expert yourself. Professional fund managers do the hard work for you, and the nature of these funds significantly reduces your risk. That's because most mutual funds own hundreds or even thousands of securities. We've reviewed dozens of the best mutual funds brokers to help you decide which is the best fit for you.

Ratings Methodology

Our Rating:

Rating image, 4.5 out of 5 stars.
4.5 stars
Info Icon Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
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= Excellent
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Bottom Line

Merrill Edge® Self-Directed offers thousands of no-transaction-fee funds. High-balance Merrill Edge® Self-Directed brokerage accounts also link up to other Bank of America accounts so you can qualify for the bank's Preferred Rewards program, which is the gold standard for loyalty banking rewards.

Fees:

$0 for online stock and ETF trades

Account Minimum:

$0

Special Offer

Open a self-directed account and get up to $600

Open Account for Merrill Edge® Self-Directed

On Merrill Edge® Self-Directed's Secure Website.

Our Rating:

Rating image, 4.5 out of 5 stars.
4.5 stars
Info Icon Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
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Bottom Line

Offer access to more than 12,000 mutual funds, but none of them are no-transaction-fee funds. However, Ally Invest's industry-low $9.95 standard mutual fund commission helps cut costs. This makes it a good choice for investors who want to select any mutual funds they want without the constraints of a no-transaction-fee list.

Fees:

$0 stock and ETF trades

Account Minimum:

$0

Special Offer Info Icon Circle with letter I in it. -- $3,000 bonus: $2mm+ deposit/transfer -- $2,000 bonus: $1mm-$1.99m deposit/transfer -- $1,200 bonus: $500k-$999.9k deposit/transfer -- $600 bonus: $250k-$499.9k deposit/transfer -- $300 bonus: $100k-$249.9k deposit/transfer -- $250 bonus: $25k-$99.9k deposit/transfer -- $100 bonus: $10k-$24.9k deposit/transfer

Up to $3,000 bonus cash

Open Account for Ally Invest

On Ally Invest's Secure Website.

Our Rating:

Rating image, 4.0 out of 5 stars.
4.0 stars
Info Icon Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
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= Excellent
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Bottom Line

One of the few brokers we've come across with a $0 mutual fund commission. The fact that you can manage your J.P Morgan self-directed and separate robo-advisor accounts under one roof is a nice plus.

Fees:

$0 per trade

Account Minimum:

$0 for self-directed, $500 for automated accounts

Special Offer Info Icon Circle with letter I in it. $625 when you fund with $250,000 or more $300 when you fund with $100,000-$249,999 $125 when you fund with $25,000-$99,999

Get up to $625 when you open and fund a J.P. Morgan Self-Directed Investing account

Open Account for J.P. Morgan Self-Directed Investing

On J.P. Morgan Self-Directed Investing's Secure Website.

Our Rating:

Rating image, 4.5 out of 5 stars.
4.5 stars
Info Icon Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
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= Excellent
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Bottom Line

An especially smart choice for investors who want to buy mutual funds and other types of investments. Shines with its robust lineup of no-transaction-fee mutual funds. Also offers a fantastic trading platform, educational resources, and third-party research.

Fees:

Commission-free stock and ETF trades, $0-$19.99 for mutual funds

Account Minimum:

$0

Special Offer

Open and fund an E*TRADE account & get up to $600 or more

Open Account for E*TRADE

On E*TRADE's Secure Website.

Our Rating:

Rating image, 5.0 out of 5 stars.
5.0 stars
Info Icon Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
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Bottom Line

Wide array of no-transaction-fee mutual funds, $0 commissions for stocks and ETFs, and one of the most robust trading and mobile investing platforms.

Fees:

$0 stock trades

Account Minimum:

$0

Open Account for TD Ameritrade

On TD Ameritrade's Secure Website.

Our Rating:

Rating image, 4.5 out of 5 stars.
4.5 stars
Info Icon Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
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= Excellent
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Bottom Line

We're big fans of Charles Schwab's proprietary mutual funds. Some have no expense ratio at all and have minimum investments of $100 or less. Clients also get access to thousands of no-transaction-fee mutual funds and a network of hundreds of branches for in-person help.

Fees:

$0 stock trades and for OneSource mutual funds

Account Minimum:

$0

Our Rating:

Rating image, 4.5 out of 5 stars.
4.5 stars
Info Icon Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
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Bottom Line

Vanguard is well known for its own low-cost index funds, but you can't invest in many commission free anywhere but Vanguard. In addition to its own standout offerings, investors can access thousands of other funds with no transaction fee.

Fees:

$0 stock and ETF trades, $0-$20 for mutual funds

Account Minimum:

$0

Our Rating:

Rating image, 4.0 out of 5 stars.
4.0 stars
Info Icon Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor
Bottom Line

Packs in more than 417,000 no-transaction-fee mutual funds. While it does charges a competitive commission for other mutual funds, the selection of funds is the real reason the company gets a spot on the list. Interactive Brokers offers more than 45,000 mutual funds.

Fees:

As low as $0 stock trades, lesser of $14.95 or 3% of trade value for mutual funds

Account Minimum:

$0

Our Rating:

Rating image, 5.0 out of 5 stars.
5.0 stars
Info Icon Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor
Bottom Line

Fidelity offers its highly regarded mutual fund lineup with no commission, along with more than 3,000 others with no transaction fee.

Fees:

$0 commission for online US stock and ETF trades, $0-$49.95 for mutual funds

Account Minimum:

$0

INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE

What are mutual funds?

A mutual fund is an investment vehicle that pools investors' money together to invest in a common purpose.

For example, let's say a technology-focused mutual fund receives $100 million in investor capital. Its managers would take that money and invest in a portfolio of technology stocks. If the portfolio rises in value, all the fund's investors mutually benefit.

Should you buy mutual funds through a broker?

It's important to point out there are two ways you can invest in mutual funds. You can open a brokerage account through one of the best brokers for mutual funds. If you're new to investing, check out our list of best stock brokers for beginners.

Alternatively, you can choose to invest in mutual funds directly through the companies that operate them. For example, let's say you want to invest in a T. Rowe Price mutual fund. You can simply open an account with T. Rowe Price and buy your mutual funds through the company.

There are some advantages to buying your mutual funds directly, and the biggest is avoiding commissions. Sure, many of the best brokers for mutual funds offer a list of mutual funds on a no-transaction-fee (NTF) basis. But there's no guarantee the fund you want to buy will be on the list. Buying directly typically avoids any type of transaction fees.

On the other hand, there is value in keeping all of your investments in one place. Many of the best brokers to invest in mutual funds have thousands of NTF funds. You can also buy and sell different types of stocks, bonds, and ETFs in a brokerage account. The best stock brokers often have other value-adding features as well, such as stock research, educational resources, and more.

Can you buy mutual funds online?

Many online stock brokers offer a selection of mutual funds customers can invest in, including index funds and actively managed funds. With low or no commissions, low fees, and a focus on low-expense-ratio index funds, online brokers can be a particularly affordable way to invest in mutual funds.

Most online stock brokers also let you invest in exchange-traded funds (ETFs), a newer way for investors to mutually benefit from bundled funds. Rather than a fund that actively invests pooled money into various stocks, an ETF is a group of securities bundled into a single entity that you can invest in like a traditional stock.

TIP

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Are mutual funds right for you?

Mutual funds can put your investments on autopilot and take away the need to do extensive stock research. Mutual fund investing also adds portfolio diversification. After all, many mutual funds invest in hundreds, or even thousands, of different stocks or bonds. Your performance won't be too dependent on any single one.

Who should invest in mutual funds?

Mutual fund investing is best suited for:

  • Investors who want to leave the research and evaluation of stocks to someone else.
  • Investors who don't want to constantly monitor their investments. Mutual funds are designed for investors with a set-it-and-forget-it mindset.
  • Investors who want an all-in-one portfolio of stocks and don't want too much of their money dependent on any one company's performance.
  • Investors who don't want to worry about intraday fluctuations in the value of their investments, as mutual funds only trade once a day.

Some people see robo-advisors as a cheaper alternative to mutual funds, as they're also a hands-off way to invest. In this scenario, the robo-advisor's algorithms automate your investments according to your risk tolerance and other factors.

Should you invest in index funds or actively managed mutual funds?

There are two main types of mutual funds:

  • Actively managed: These funds employ fund managers to choose investments they expect to produce the best returns for investors.
  • Passively managed: These funds aim to track a certain benchmark index, such as the S&P 500.

Although these are both technically mutual funds, people often refer to actively managed funds as "mutual funds" and passively managed funds as "index funds."

The aim of actively managed funds is to beat the performance of an index. Fund managers make decisions to buy and sell stocks with the money in a fund based on their expectations of a stock's (i.e., a company's) performance.

That's not to say actively managed mutual funds will always beat their respective benchmarks. In fact, numerous studies have shown the majority of actively managed mutual funds don't do any better than index funds. Some have excellent track records, but it's important to do your homework before investing.

Passively managed funds are also referred to as "index funds" because they are set up to mimic the performance of an entire stock index. For example, an S&P 500 index fund would own the stocks of all 500 companies in that index, in weightings that would produce returns that match those of the index.

Once you've decided mutual fund investing is right for you, the next step is to decide which of the two categories is the better fit for your financial goals. (Hint: For many investors, index funds can be a safer bet. Actively managed funds tend to have significantly higher fee structures than index funds, so it's important to be sure you're getting your money's worth.)

How much do mutual funds cost?

If you're looking for the best broker to buy mutual funds, there are three potential costs to be aware of.

Commissions

Most brokers have done away with commissions for stock trades, but that's not the case for mutual funds. And the costs can vary dramatically. Our best brokers for mutual funds have standard mutual fund commissions that range from $9.95 to $49.99.

As we touched on earlier, most (but not all) brokers offer certain mutual funds on an NTF basis. This means you won't have to pay commissions as long as the fund you want is on your broker's NTF list. Many brokers easily offer thousands of NTF mutual funds. This should be a top priority when selecting which broker is best for mutual fund investing.

Sales charges

Also known as "loads," some mutual funds charge an additional fee when you buy or sell. You may get charged a percentage of the purchase amount when buying, known as a front-end load. Others charge a percentage when you sell, known as a back-end load. Both are becoming less common. It's generally a good idea to avoid funds with sales charges, as there are thousands of great mutual funds without them. Brokers typically have a search or screener function that allows you to filter for "no-load" mutual funds.

Expense ratio

This is the ongoing cost of mutual fund investing. A fund's expense ratio is its total fee structure, expressed as a percentage of assets under management. For example, a 1% expense ratio means that if you have $10,000 invested in the fund, you'll pay $100 in fees each year. To be clear, you don't directly pay mutual fund fees (you won't get a bill). Rather, funds collect their fees from the pool of money they manage.

Almost all mutual funds have expense ratios. This is how they pay their managers, cover administrative costs, and pay for other necessary costs of doing business. However, expense ratios can vary dramatically, even among funds with similar portfolios and investment objectives. As such, it's important to compare them before you select a fund.

How do you invest in mutual funds?

The way you invest in mutual funds works a bit differently than investing in stocks. Specifically, mutual funds don't trade continuously. They price once per day after the market closes, and orders are processed overnight.

To buy a mutual fund:

  1. Enter the fund's ticker symbol on your broker's page. (Mutual funds have five-letter ticker symbols.) If you don't know the correct symbol for your desired mutual fund, you can look it up by entering the fund's name.
  2. Place your order. You'll be taken to your broker's order page. Rather than choosing a number of shares to buy, you enter the dollar amount you'd like to invest.

Most mutual funds have minimum initial investment requirements, as well as minimum requirements for subsequent investments. These are often different for standard (taxable) brokerage accounts vs. retirement accounts.

Each fund has an order cutoff time (4 p.m. EST is typical), and orders placed before that will be processed on the same day. Orders received after the cutoff time will be priced and placed after the following market day.

Alternatively, you can invest in mutual funds through some investment apps. These often come with lower fees and lower account minimums than traditional stock brokers, so they might be an easier place to start if you're new to investing or just want to open a simple account, like an IRA.

Broker/Advisor Best For Commissions Next Steps
Merrill Edge® Self-Directed Offer Image
Rating image, 4.5 out of 5 stars.
Rating image, 4.5 out of 5 stars.
Best For:

No-transaction-fee mutual funds

Commission:

$0 for online stock and ETF trades

Ally Invest Offer Image
Rating image, 4.5 out of 5 stars.
Rating image, 4.5 out of 5 stars.
Best For:

Mutual fund selection

Commission:

$0 stock and ETF trades

J.P. Morgan Self-Directed Investing Offer Image
Rating image, 4.0 out of 5 stars.
Rating image, 4.0 out of 5 stars.
Best For:

App-based mutual fund investing

Commission:

$0 per trade

E*TRADE Offer Image
Rating image, 4.5 out of 5 stars.
Rating image, 4.5 out of 5 stars.
Best For:

Diverse investment needs

Commission:

Commission-free stock and ETF trades, $0-$19.99 for mutual funds

TD Ameritrade Offer Image
Rating image, 5.0 out of 5 stars.
Rating image, 5.0 out of 5 stars.
Best For:

Investing platform

Commission:

$0 stock trades

Charles Schwab Offer Image
Rating image, 4.5 out of 5 stars.
Rating image, 4.5 out of 5 stars.
Best For:

Low costs and low mutual fund investment minimums

Commission:

$0 stock trades and for OneSource mutual funds

Vanguard Offer Image
Rating image, 4.5 out of 5 stars.
Rating image, 4.5 out of 5 stars.
Best For:

Low costs

Commission:

$0 stock and ETF trades, $0-$20 for mutual funds

Interactive Brokers Offer Image
Rating image, 4.0 out of 5 stars.
Rating image, 4.0 out of 5 stars.
Best For:

Mutual fund selection

Commission:

As low as $0 stock trades, lesser of $14.95 or 3% of trade value for mutual funds

Fidelity Offer Image
Rating image, 5.0 out of 5 stars.
Rating image, 5.0 out of 5 stars.
Best For:

No-transaction-fee mutual funds

Commission:

$0 commission for online US stock and ETF trades, $0-$49.95 for mutual funds

Ask the experts

Moshe Bellows

Moshe Bellows

Managing Member of Maccabee Ventures, adjunct professor of Strategy and Entrepreneurship in the Sy Syms School of Business at Yeshiva University

What are some pros of investing in mutual funds and what are some cons?

Pros:

  • Convenient: mutual funds are easily found across virtually all investment platforms and may be purchased with any type of brokerage account.
  • Diversification: mutual funds invest in a basket of companies in an attempt to diversify risk and/or provide for upside reward. Mutual funds can be of various baskets, including domestic, international, any sector, index tracking, etc., with new ones popping up often. A novice and more experienced investor can most easily create a balanced and diverse portfolio with a modest amount of funds.
  • Professional Management: funds are generally run by teams of folks with years of experience and who have been through all types of up, down, and sideways markets. It is their job to manage the fund, buying and selling individual names to keep with the fund's thesis and goals.
  • Reinvestment: if the fund throws off capital gains or dividends, they can easily be reinvested into the fund if so desired.

What is the difference between robo-advisors and mutual funds?

Mutual funds have human folks managing the portfolio. Robo-advisors utilize algorithms to decide when to buy and sell portfolio companies.

Are mutual funds a good choice for someone new to investing?

I believe mutual funds and their close cousins, ETFs, are a good start for someone new to the market. It allows one to dip their toe in and learn while still being actively managed by a professional investor. Picking individual stocks and monitoring them is often too challenging for a nonprofessional. A properly crafted mutual fund and ETF portfolio build in some diversification and can be a good foundation from which to grow a balanced portfolio.

FAQs

  • Investors can buy mutual funds directly from the fund provider. Many mutual funds have a direct plan where investors can buy mutual funds (usually through their online website), without a brokerage account. Investors may also buy a mutual fund through their workplace retirement account, such as a 401(k) or 403(b).

  • Investors should look for a mutual fund broker that has a strong industry reputation, reliable track record, a wide range of mutual funds, low cost mutual funds, and educational content and tools. Investors should also look to see what other fees the mutual fund broker may charge, up-to-date security standards, as well as a trading platform that best suits their trading needs.

  • Most mutual funds charge fees in the form of expense ratios that are accounted for in the price of the mutual fund. Expense ratios can be as high as 2.5% every year, but there are many high-quality mutual funds with very low expense ratios. Some mutual funds also charge sales commissions, also known as loads. Again, there are many well-known mutual fund companies that don't charge loads, and this is becoming more common in the industry. These fees combined cover costs for the mutual fund company, such as 12b-1 fees (marketing costs) and other routine operating expenses.

About the Author