Best Online Brokerages for Commission-Free ETFs

Every time you trade a financial product through an online brokerage, you are charged a commission, which is a broker's fee for executing the trade. Since fees can quickly erode investable funds and returns, investing in no-fee financial products like commission-free exchange traded funds (ETFs) is a good way to preserve your investing capital, and particularly beneficial for smaller-sized accounts or beginner investors looking to ease their way into online investments. We looked at 15 online brokerages that offer commission-free exchange traded funds (ETFs) and ranked them based on the following factors: 

Availability of commission-free ETFs: Not all online brokerages offer ETFs that are commission-free, and those that do vary widely in terms of what is on offer. We ranked the online brokerages in our study based on the number of commission free ETFs available through their platform. 

Types of commission-free ETFs available: ETFs contain investments such as stocks, bonds or commodities, and they generally track an index. There are equity ETFs, bond ETFs, commodity and sector ETFs, among other different types. We also looked at the availability of different types of commission-free ETFs offered by online brokerages.

Early-redemption fee for commission-free ETFs: Investors should be wary of the fine print with commission-free ETFs. Some online brokerages charge a fee if an investor sells a commission-free ETF before a stipulated period of time. We included this factor in our study of online brokerages offering commission-free ETFs. 

Best Brokers for Commission-Free ETFs

The set of 15 online brokerage companies that we considered were: Charles Schwab, e*Trade, Fidelity, Firstrade, Merrill Edge, OptionsHouse, Scottrade, Sharebuilder from Capital One, SogoTrade, T. Rowe Price, TD Ameritrade, TIAA-CREF Self-Directed Brokerage, TradeKing, Tradestation, and WF WellsTrade. 

Our list of recommendations is based on the criteria defined above, and may include online brokerages with higher transaction or service fees. Except for TD Ameritrade, all of the following brokerages require a minimum initial deposit ranging from $500 to $2,500.

Charles Schwab

With 200 different commission-free ETFs, Charles Schwab offers the most number and types of commission-free ETFs among the fifteen online brokerages we looked at. With no early redemption fee for commission-free ETFs, Charles Schwab is a great choice for investors looking to minimize ETF trading costs. 

  • Number of commission-free ETFs: 200
  • Types of commission-free ETFs: Domestic equity, International equity, Fixed Income, Commodity, Sector
  • Early-redemption fee for commission-free ETFs: None
  • Opening minimum: $1,000

E*Trade

E*Trade offers the second largest number of commission-free ETF among the online brokerages we included in our study at 112 commission-free funds. Unlike Schwab, the commission-free ETFs do not include commodity or sector funds. E*Trade charges the highest early redemption fee for ETFs purchased and sold within 30 days at $19.99.

  • Number of commission-free ETFs: 112
  • Types of commission-free ETFs: Domestic equity, International equity, Fixed Income
  • Early-redemption fee for commission-free ETFs: $19.99 within 30 days
  • Opening minimum: $500

TD Ameritrade

TD Ameritrade offers 112 commission-free ETFs, and ties with e*Trade for the highest early redemption fee for ETFs purchased and sold within 30 days. TD Ameritrade does not offer commission-free sector ETFs. However, its policy of no opening minimum is a great choice for investors with smaller-sized accounts seeking commission-free ETFs. 

  • Number of commission-free ETFs: 112
  • Types of commission-free ETFs: Domestic equity, International equity, Fixed Income, Commodity
  • Early-redemption fee for commission-free ETFs: $19.99 within 30 days
  • Opening minimum: None

Fidelity

Fidelity offers a wide range of choices for commission-free ETFs, and charges a relatively low fee for early redemption. They're also a popular source of ETFs and mutual funds covering a variety of sectors. However, Fidelity also requires one of the highest account opening minimum at $2,500. 

  • Number of commission-free ETFs: 85
  • Types of commission-free ETFs: Domestic equity, International equity, Fixed Income, Commodity
  • Early-redemption fee for commission-free ETFs: $7.95 within 30 days
  • Opening minimum: $2,500

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