7 Game-Changing Low-Cost Brokers That Are Reshaping ETF & Mutual Fund Investing
Wall Street's fee machine meets its match as a new breed of brokers slashes costs to the bone.
Zero-commission revolution goes mainstream
Seven platforms now offer institutional-grade access without the traditional price tag—democratizing portfolio construction for everyday investors. No more paying 1-2% just for the privilege of owning diversified assets.
The fine print you won't find in their marketing
While trading costs hit zero, these brokers still profit from payment for order flow and margin lending—because in finance, if you're not paying for the product, you probably are the product.
Execution quality separates contenders from pretenders
The real test comes in bid-ask spreads and trade fulfillment. Top performers deliver price improvement on over 90% of orders, putting actual dollars back in investors' pockets.
Tools that rival hedge fund platforms
Automated rebalancing, tax-loss harvesting, and institutional research now come standard—features that used to require seven-figure account minimums.
The cynical take: They're not charities—just betting you'll eventually trade options or borrow money. Because nothing says 'financial revolution' like finding new ways to monetize your portfolio.
The Best Low-Cost Brokers for ETF and Mutual Fund Investing
Here is a quick look at the top contenders in the low-cost brokerage space, each distinguished by a unique value proposition for the cost-conscious investor.
- Fidelity: Best for a Truly Zero-Fee Experience and Comprehensive Research.
- Charles Schwab: Best for an All-Around, Full-Service Experience and Extensive Selection.
- Vanguard: Best for the Buy-and-Hold Investor and Unparalleled Low-Cost Ethos.
- Interactive Brokers: Best for Savvy Investors Seeking Advanced Tools and Global Access.
- Ally Invest: Best for a Simple, Integrated Banking and Investing Experience.
- Firstrade: Best for Truly Commission-Free Investing Across the Board.
- E*Trade: Best for User-Friendly Platforms and Robust Educational Tools.
In-Depth Brokerage Reviews: A Detailed Breakdown of Features and Fees
To select the ideal brokerage for a portfolio, a deeper understanding of each firm’s strengths is required. The following sections provide a detailed analysis of the top-ranked brokers, going beyond simple fees to explore their platforms, resources, and strategic differentiators.
Fidelity: The King of Zero-Fee Investing
Fidelity has cemented its reputation as a premier choice for investors, particularly those new to the market, by aggressively leading the industry’s cost-cutting race. The firm is consistently ranked as one of the best brokers due to its low-cost trading, high-quality research, and excellent customer service.
One of Fidelity’s most prominent features is its pioneering approach to zero-fee investing. The firm introduced the first zero-expense ratio index mutual funds, a landmark MOVE that disrupted the market. These funds—such as the Fidelity ZERO Large Cap Index Fund (FNILX), Fidelity ZERO Extended Market Index Fund (FZIPX), Fidelity ZERO Total Market Index Fund (FZROX), and Fidelity ZERO International Index Fund (FZILX)—charge a 0% expense ratio and have no minimums to invest. This powerful value proposition means that every dollar an investor puts into these funds is fully invested, with no portion siphoned off for management or operational costs.
In addition to its revolutionary zero-fee funds, Fidelity offers a full suite of low-cost services. The firm charges $0 commission for online trades of U.S. stocks, ETFs, and options. For investors interested in mutual funds, Fidelity provides access to nearly 3,300 no-transaction-fee mutual funds in addition to its own offerings. The firm is also highly accessible for beginners, allowing investors to start with as little as $1 by purchasing fractional shares via its “Stocks by the Slice” program.
While the “zero-fee” headline is a compelling marketing claim, a nuanced understanding reveals that this comes with a subtle consideration. A no-fee fund may have to track a more straightforward index to keep costs low, which could potentially affect returns over the long term. For the sophisticated investor, this points to the importance of looking beyond a single metric and evaluating a fund’s underlying index and tracking error against similar, low-cost alternatives from competing firms. The fact that the industry has been driven to such a point of cost compression is an undeniable benefit to the average investor, but it also elevates the need for due diligence.
Charles Schwab: The All-Around Champion for Every Investor
Charles Schwab is a titan of the brokerage world, credited with pioneering low-cost investing in the 1970s and maintaining its competitive edge to this day. The firm is consistently rated as a top-tier broker and is often described as a great all-around choice for investors, from those just starting out to those who are more advanced.
A key strength of Schwab is its vast and diverse selection of investment options. The firm offers a staggering selection of nearly 4,300 no-load, no-transaction-fee mutual funds. This extensive list provides investors with a wide range of choices to build and diversify their portfolios without incurring trading costs. For investors who are focused on ETFs, Schwab offers commission-free online trading.
The firm’s strategic focus on maintaining a low-cost leadership position is evident in its recent actions. In early 2025, Schwab Asset Management announced a fee reduction on four of its equity index ETFs, a move that will make the cost of all Schwab equity and fixed income market cap-weighted index ETFs less than 10 basis points. This decision is not merely an act of generosity; it represents a direct and calculated response to the ongoing competitive pressure from rivals like Fidelity and Vanguard. By continually reducing fees, Schwab ensures its pricing remains at the forefront of the industry, reinforcing its appeal to cost-conscious investors who value a comprehensive, full-service broker.
In addition to its competitive pricing, Schwab is lauded for its advanced investing tools, extensive resources, and strong customer support. The firm’s brokerage platform is robust and provides a wealth of research, making it a compelling choice for investors who want a one-stop shop for all their financial needs. With a $0 account minimum and the ability to buy fractional shares, Schwab is highly accessible to new investors.
Vanguard: The Original Low-Cost Innovator
Vanguard has long been regarded as a leader in low-cost investing, and its influence on the industry cannot be overstated. The firm’s unique ownership structure is the fundamental reason for its low-cost ethos: Vanguard is owned by its funds, which in turn are owned by its investors. This structure eliminates the conflict of interest that may arise at publicly traded firms that must serve both outside shareholders and fund investors. At Vanguard, the sole focus is on prioritizing the needs of its fund owners, resulting in the lowest possible fees.
This investor-owned model has created a powerful, industry-wide phenomenon often referred to as the “Vanguard effect”. Vanguard’s relentless mission to lower costs and provide accessible index funds for small investors has forced other firms to follow suit, cleaning up their practices and cutting their own fees to remain competitive. Thus, every investor, regardless of their brokerage, has benefited from Vanguard’s pioneering vision.
For the buy-and-hold investor, Vanguard offers an unbeatable value proposition. The firm is renowned for its low-expense ratio mutual funds and ETFs, with an average expense ratio of 0.07% at the end of 2024, significantly lower than the industry average of 0.44%. Online trades of Vanguard’s own stocks and ETFs are free. While the firm charges a fee of $8 to $20 for trades of non-Vanguard funds, it offers over 3,000 no-transaction-fee mutual funds from other providers as well.
While Vanguard’s focus on cost has made it a favorite for long-term investors, its growth has also presented some challenges. With its client base swelling to over 50 million people, some clients have noted a decline in customer service, including longer wait times to speak with representatives. Despite these growing pains, the firm continues to prioritize its mission, as demonstrated by a significant round of fee cuts in early 2025, which were estimated to save clients hundreds of millions of dollars. For the investor whose primary goal is to build wealth over time with minimal friction, Vanguard remains the Gold standard.
Interactive Brokers: The Powerhouse for the Savvy Investor
Interactive Brokers is a unique player in the low-cost brokerage space. While it has long been known for catering to “more advanced traders and professionals,” the firm has made a deliberate push to attract new investors with its simplified, low-cost offerings. This “prosumer” strategy offers new investors a path to sophisticated trading without having to switch brokers as they grow in knowledge and experience.
The firm’s value proposition is built around two distinct pricing plans: IBKR Lite and IBKR Pro. The IBKR Lite plan is specifically designed for U.S. retail investors and offers a $0 account minimum, no inactivity fees, and $0 commissions on U.S.-listed stocks and ETFs. This makes it a highly attractive entry point for the cost-conscious beginner.
Beyond its competitive pricing, Interactive Brokers stands out for its vast selection of no-transaction-fee mutual funds. With nearly 18,000 funds available, it offers one of the largest selections in the industry. For the investor who wants a wide array of options beyond ETFs, this makes Interactive Brokers a compelling choice. The firm also provides institutional-grade trading platforms and tools, such as the Trader Workstation (TWS) and the Mutual Fund/ETF Replicator, which helps investors identify and invest in lower-cost ETFs that replicate the strategies of higher-fee mutual funds.
By offering a streamlined entry point with IBKR Lite while retaining its professional-grade features and vast product selection, Interactive Brokers is positioning itself as an excellent choice for the ambitious new investor. It provides a comprehensive ecosystem where a beginner can start with simple investments and seamlessly graduate to advanced trading strategies, institutional-level tools, and access to a massive selection of global markets.
Ally Invest: The Digital-First Dynamo
Ally Invest is an ideal choice for investors who value simplicity and a seamless, integrated digital experience. As a part of the larger Ally financial institution, Ally Invest’s CORE appeal is the ability to manage both banking and investing from a single, user-friendly platform.
A major differentiating factor for Ally Invest is its pricing model. The firm cut its commission on no-load mutual funds to $0 per trade in 2023, making it a top contender for mutual fund investors. Ally Invest also offers $0 commission on eligible U.S. stocks and ETFs, a wide selection of commission-free ETFs, and no account minimums to get started.
The integrated experience with Ally Bank is a significant advantage. The ability to access an entire “money story” in one view and transfer funds effortlessly between banking and brokerage accounts provides a level of convenience that is highly valued by a certain type of investor. Ally is also well-regarded for its customer service and digital-first approach. This focus on a streamlined, holistic experience makes Ally Invest a great extension of an existing relationship for Ally Bank customers.
For the hands-off investor, Ally also provides a robo-advisor service that offers automated portfolio management with no advisory fee if a portion of the balance is held in cash. This caters to a specific persona that values a set-it-and-forget-it approach to investing, proving that Ally’s strategy is to provide a simple, effective, and low-cost solution that goes beyond just a basic brokerage account.
E*Trade: The Reliable Veteran with Modern Tools
As one of the pioneers of online trading, ETrade has a long-standing reputation for trust and reliability in the financial industry. While some “legacy” brokers have struggled to adapt to the modern, low-cost environment, E
Trade has successfully done so, offering a blend of brand trust and competitive features.
ETrade charges $0 commission for online trades of U.S.-listed stocks, ETFs, and options. This makes it an attractive choice for cost-conscious investors, especially when combined with its array of professional-grade trading platforms and tools. E
Trade provides powerful platforms like its web platform and the Power E*Trade platform, which cater to both casual and more active traders. These platforms offer features like streaming quotes, charting tools, and screeners to help investors select the right stocks and funds for their needs.
A major advantage of ETrade is its robust educational and research resources. The firm offers a wide range of reports and market commentary, providing investors with the tools and knowledge to make informed decisions. For those interested in automated investing, E
Trade offers prebuilt portfolios of leading mutual funds or ETFs, with a low minimum investment of $500 for mutual funds and $2,500 for ETFs.
While ETrade lacks some of the features of its competitors, such as fractional share purchases for individual stocks, it does allow for the reinvestment of dividends into fractional shares and offers fractional shares of ETFs with a minimum of $25 through its Automatic Investing program. This shows the firm’s willingness to adapt and provide solutions that cater to the needs of different investors. E
Trade’s position as a reliable veteran with a modern, user-friendly approach makes it an excellent choice for a cautious investor who wants the security of an established institution with the low costs of a modern broker.
Firstrade: The Hidden Gem with Unbeatable Pricing
Firstrade may not be as well-known as some of the industry’s largest players, but it has carved out a powerful niche by offering a pricing model that is almost unrivaled in its generosity. The firm is a true cost-cutter’s dream, offering genuinely commission-free investing across the board.
The most significant differentiator for Firstrade is its policy of offering no commissions on all mutual funds, a deal that few other brokers can match. While many of its competitors offer a limited list of no-transaction-fee funds, Firstrade has removed this barrier entirely, providing access to over 11,000 mutual funds without a commission. This move simplifies the investment decision-making process for the cost-conscious investor who wants to focus on portfolio construction without worrying about trading fees.
Firstrade’s aggressive pricing strategy extends to other products as well. The firm offers $0 commission on stock and ETF trades, and, in a rare move, also charges no per-contract fees on options trades. With a $0 account minimum and the ability to purchase fractional shares, Firstrade removes the primary financial barriers to entry for new investors.
In addition to its low costs, Firstrade provides a solid platform and a host of resources. The firm offers professional-grade options analytics tools, access to premium research from providers like Morningstar and Zacks, and a variety of educational resources for both beginners and seasoned traders. Firstrade’s focus on providing a comprehensive, low-cost trading environment makes it a powerful contender and a smart choice for any investor who prioritizes eliminating every possible fee.
An Essential Guide to ETFs and Mutual Funds
Before committing to a brokerage account, it is important to have a clear understanding of the investment vehicles themselves. While both ETFs and mutual funds serve to provide diversification and professional management, they have key differences that can impact an investor’s strategy and returns.
What is a Mutual Fund?
A mutual fund is a pooled investment vehicle that gathers money from a large number of investors to invest in a diversified portfolio of stocks, bonds, or other securities. Mutual funds are a cornerstone of modern investing and have been available since the 1920s. The combined assets are managed by a professional fund manager on behalf of all shareholders.
The primary characteristic of a mutual fund is its trading mechanism: its shares are typically bought and sold only once per day after the market closes, at the end-of-day net asset value (NAV). While this can make trading less flexible, it is a straightforward process. Mutual funds can also have a sales “load” or fee, which is a commission paid to a broker. However, many brokers now offer “no-load” funds that have no such charge, making them more cost-efficient.
What is an ETF?
An ETF, or exchange-traded fund, is also a pooled investment vehicle that holds a collection of diversified assets, such as stocks, bonds, or commodities. However, unlike a mutual fund, an ETF is structured to trade on a stock exchange just like a regular stock.
A helpful way to think about an ETF is to imagine a basketball team. The team is made up of different players—a point guard, a center, and so on—each with a different set of strengths. When grouped together, they can diversify their strengths to win the game. Similarly, an ETF is a “team” of diversified assets that works together to track the performance of a specific index or market, such as the S&P 500.
This structure provides a number of advantages. An ETF can be bought and sold continuously throughout the day, providing more flexibility than a mutual fund. ETFs are also generally more tax-efficient because shareholder activity typically does not cause capital gains distributions to other shareholders, a feature that can reduce an investor’s after-tax return in a mutual fund. In general, ETFs also tend to have lower costs and expense ratios with fewer layers of fees.
ETFs vs. Mutual Funds: A Head-to-Head Comparison
The differences in cost and fees are becoming less pronounced as a result of the ongoing competition among brokers. The distinction between these investment products is now often less about cost and more about other factors, such as trading frequency, tax implications, and availability through a specific platform. The abundance of low-cost options means that the most important decision is no longer a simple choice between one fund and another, but a strategic evaluation of which product aligns best with a particular investment strategy and risk profile.
Choosing the Right Broker for Your Portfolio
Selecting a brokerage is a highly personal decision. While the firms on this list are all excellent choices, the optimal one depends on individual needs, goals, and investing style. The following questions can help guide a decision, followed by a final, at-a-glance comparison of the brokers.
- Are you a buy-and-hold investor or an active trader?
- Do you need advanced research tools and a massive selection, or a simple, streamlined experience?
- What kind of investments will you make (ETFs, mutual funds, or individual stocks)?
- Do you want to manage your banking and investing in a single, integrated platform?
The ongoing competitive landscape, particularly the “race to zero” on fees and commissions, is a major benefit for the retail investor. The best brokerage is no longer a matter of a single, definitive ranking but a function of which firm’s unique strengths most closely align with an investor’s personal needs. The robust selection of low-cost, high-value brokers available today empowers investors to build a diversified portfolio and pursue their financial goals with confidence.
Frequently Asked Questions (FAQs)
What is the difference between a mutual fund and an ETF?
The primary difference lies in how they trade. A mutual fund trades once a day at the closing price, known as the net asset value (NAV). An ETF, on the other hand, trades like a stock on an exchange and can be bought and sold continuously throughout the day while the market is open. While both can provide diversification and professional management, ETFs are generally considered to be more tax-efficient and have lower costs.
How can I invest without paying a lot of fees?
The modern investment landscape offers numerous ways to minimize fees. The most important strategies are to choose a brokerage with $0 commissions on stock and ETF trades and to focus on investment products with low expense ratios. The brokers reviewed in this report are excellent examples of firms that offer commission-free trading. Additionally, many firms provide a large list of “no-transaction-fee” mutual funds and even zero-fee index funds.
What is an expense ratio, and why does it matter?
An expense ratio is the percentage of a fund’s assets that is paid annually to run the fund. It covers management fees, operational costs, and other expenses. The expense ratio is critical because it directly reduces an investor’s total return. For example, a difference of just 1% in an expense ratio on a $10,000 investment can add up to over $20,000 in lost returns over 30 years, assuming a 5% annual return. Even small differences in fees can have a significant impact on long-term wealth accumulation.
What is a no-load mutual fund?
A no-load mutual fund is a fund that does not charge a sales fee, or “load,” when you purchase or sell shares. This means that every dollar you invest goes directly into the fund, rather than a portion being paid to a broker as a commission. Many brokers, like Ally Invest and Firstrade, now offer a wide selection of no-load mutual funds with no transaction fees.
Is investing risky?
Investing does involve risk, as the value of an investment can decrease over time. However, the goal of investing is not to eliminate risk but to manage it. One of the most effective ways to manage risk is through diversification, which means spreading assets across different types of investments so that a decline in one area does not have a devastating impact on the entire portfolio. ETFs and mutual funds are excellent tools for diversification, as they allow an investor to instantly gain exposure to hundreds or thousands of different stocks or bonds.
How do I open an online brokerage account?
Opening an online brokerage account is a simple, straightforward process that can be completed in minutes. The first step is to choose a brokerage that aligns with your needs. After that, an investor can get set up by providing some basic personal information, such as their name, address, and Social Security number. Once the account is opened and funded, it is ready for investing.
