Best Stock Brokers for Mutual Funds 2019
By: Kat Peach
Updated: November 3, 2019
Mutual funds are great investment products for people who don’t feel like researching and buying individual stocks. They can provide the safety of an expertly diversified portfolio. But you won’t have to pay the high fees of a professional portfolio manager.
You can easily purchase mutual funds from most online stock brokers. This is a hotly competitive industry right now. That means you can benefit from slashed minimums and decreased fees.
To make finding a brokerage even more convenient, we’ve compiled this list of the best brokers for mutual funds. All of the companies on this list offer low-cost mutual funds, in addition to other services for your portfolio.
The Best Brokers for Mutual Funds in 2019
Ally Invest is the brokerage arm of Ally Financial, one of the leading financial companies in the United States. The Ally family also includes Ally Bank, one of our highest-ranked online banks. This makes Ally a great one-stop shop for your financial needs.
Ally Invest offers extremely low commissions on mutual funds. You can buy and sell no-load funds for only $9.95 per trade. Ally currently offers more than 12,000 mutual funds.
In addition, Ally Invest recently eliminated commissions on stock, exchange-traded fund (ETF) and options trades. So if you decide you want to invest beyond mutual funds, this is an excellent option.
Charles Schwab is a behemoth among brokers. Simply put, it’s the largest stock broker in the country.
Through the Schwab Mutual Fund OneSource service, the brokerage offers a large selection of no-load, no-transaction-fee mutual funds. The minimum for these funds is $100.
All other funds cost up to $49.95 per purchase.
Schwab also provides helpful tools and research that can help you pick the mutual funds that are right for your portfolio. Plus it has also eliminated transaction fees for most stock, options and ETF purchases.
E*TRADE was one of the first online discount brokers to make a big splash in the industry. (Remember those old vomiting-baby ads?)
The broker currently offers more than 4,400 no-load, no-transaction-fee mutual funds. For funds that do require a transaction fee, it’s only $19.99.
Like Ally Invest, E*TRADE recently did away with commissions on stock, options and ETF trades. That makes E*TRADE an all-around excellent choice if you need a stock broker.
Fidelity is one of the longest-standing stock brokers, and it’s considered a global leader in mutual funds. The Fidelity FundsNetwork offers more than 10,000 funds from Fidelity and other companies.
Fidelity also provides the Mutual Fund Evaluator, a tool that lets you filter and sort through the broker’s library of funds.
The broker offers four zero-expense ratio index mutual funds, but there are hundreds that carry no transaction fees. Fidelity requires no minimum to invest. Non-Fidelity funds carry a transaction fee of $49.95 per purchase.
Fidelity is now also a fee-free stock broker for stocks, options and ETFs.
Here at Investor Junkie, we’ve considered TD Ameritrade one of our favorite stock brokers. It offers comprehensive trading tools and platforms that can help you maximize your investing experience. Plus, now stock, ETF and options trades are commission free.
The fact that TD Ameritrade offers hundreds of commission-free mutual funds is just icing on the cake. Keep in mind that there are some no-load funds that do require a $49.99 commission.
A true pioneer in this space, Vanguard’s branded mutual funds are famous in the investment community. In fact, they’re often considered the gold standard.
There are currently more than 140 mutual funds bearing the Vanguard name. Along with the world’s oldest index mutual fund — the Vanguard 500 — there are funds that cover bonds, stocks, emerging markets and more. All of these are free of transaction fees.
In addition, the company offers more than 3,000 non-Vanguard mutual funds with no transaction fees as long as you trade online. Another 6,000 funds bear a modest $20-per-trade fee.
Note that Vanguard funds do have a minimum: $3,000 for non-retirement accounts and $1,000 for IRAs. And keep in mind that Vanguard still charges commissions on stock, ETF and options trades.
Mutual Fund Fees Explained
When browsing a broker’s mutual fund listing, you may find confusing information on several different kinds of fees.
Fees vary from fund to fund — it all depends on the broker. That’s why it’s important to always read the fine print and shop around.
However, note that most funds will pay operating fund expenses out of each fund’s assets, instead of you having to foot the bill.
Here Are Typical Shareholder Fees
Sales Loads: These are the commissions you pay to the broker who sells you the mutual fund. There are two kinds of sales loads:
Front-End: You pay these when you purchase the fund shares.
Back-End: You pay these when you sell your fund shares.
Redemption Fees: As suggested by their name, these fees are assessed when you sell your fund shares.
Exchange Fees: If you transfer your shares to another fund, you could be charged this fee.
Account Fees: Plain and simple, these are maintenance fees. They vary by broker.
Purchase Fees: These fees are similar to sales load commissions, but they’re paid to the fund, not the broker.
Here Are Typical Annual Fund Operating Expenses
Management Fees: These are paid out of fund assets for the fund’s investment advisor. They cover the management of the fund’s portfolio.
Distribution (12b-1) Fees: These are applied to a fund’s costs for marketing, advertising, printing, etc. Luckily, FINRA places a 0.75% cap on these fees.
Other Expenses: This category encompasses all other fees you may have to pay — including custodial fees, legal and accounting expenses, administration costs, etc.
Pay close attention to the fees your stock broker is charging you — a high-yield fund with high fees could be earning you less retirement money over the long run than a fee with lesser returns but smaller fees.