Exchange-traded funds (ETFs) are widely favored for investing in stocks due to their diversification, potential for attractive returns, and lower risk compared to individual stocks. They offer these benefits at a typically reasonable cost.

Here are some top online brokers for ETF investing, each with unique reasons to consider them:

ETFs have surged in popularity since the first U.S. ETF debuted in the early 1990s. These funds resemble mutual funds in that they consist of baskets of securities tracking broad indexes like the S&P 500 or niche sectors such as social media, gold, or healthcare.

Unlike mutual funds, ETFs trade like stocks throughout the trading day, making them appealing to investors. They offer a diversified approach to portfolio management without the stress of selecting individual stocks.

“ETFs provide instant diversification across market sectors or entire markets from the first share you buy, rather than the concentrated risk of individual stocks,” says Greg McBride, CFA, chief financial analyst at Bankrate. “As Jack Bogle famously said, ‘Instead of looking for the needle in the haystack, just buy the whole haystack.'”

According to the Financial Planning Association’s 2023 Trends in Investing survey, over 90 percent of investment professionals “use or recommend” ETFs to their clients. ETFs are noted for their tax efficiency and lower costs compared to mutual funds.

  • Charles Schwab
  • Fidelity Investments
  • Vanguard Group
  • E-Trade Financial
  • Firstrade
  • Merrill Edge
  • Ally Invest

Charles Schwab has long been a champion of individual investors, originally offering zero commissions on its own ETFs before extending this policy to all ETFs. Individual stock trades are also commission-free, and there are no fees for opening or maintaining a brokerage account at Schwab.

In addition to commission-free trading, Schwab offers an extensive range of educational resources, including robust research and user-friendly tools. The ETF Select List, for example, highlights investor-friendly funds, considering factors like commissions, fees, historical performance, and suitability for individual investors. Former TD Ameritrade clients who have transitioned to Schwab are likely to find the offerings impressive.

  • Trade commission: $0
  • Minimum amount to open a brokerage account: $0

Vanguard, renowned for its low-cost fund offerings and managing trillions in global assets, made significant strides in retail investing in 2018 by eliminating commissions on approximately 90 percent of ETFs on its platform. Today, investors can trade all available ETFs at no cost.

To navigate the extensive array of ETF options, Vanguard provides powerful screening tools. These tools allow investors to compare ETFs based on criteria such as expense ratios, management style (active or passive), average annual returns, and more. Investors also have the option to have a Vanguard representative execute trades for Vanguard ETF purchases at no additional charge. Once ETF selections are made, Vanguard’s planning tools assist in formulating and implementing a comprehensive financial strategy.

  • Trade commission: $0
  • Minimum amount to open a brokerage account: $0

Vanguard, a leader in low-cost fund management with trillions in global assets under management, revolutionized retail investing in 2018 by making approximately 90 percent of all ETFs on its platform commission-free. Today, investors can trade all available ETFs without incurring any fees.

To navigate through its extensive ETF offerings, Vanguard provides robust screening tools. These tools allow investors to compare ETFs based on criteria such as expense ratios, management style (active or passive), average annual returns, and more. Vanguard also offers the option for investors to have a Vanguard representative execute trades on their behalf at no additional cost when purchasing Vanguard ETFs. Once ETF selections are made, Vanguard’s planning tools assist in devising and implementing a comprehensive financial strategy.

  • Trade commission: $0
  • Minimum amount to open a brokerage account: $0

E-Trade offers a diverse range of options for investing in ETFs, going beyond traditional purchases. All available ETFs are commission-free, and investors can utilize E-Trade’s screener to filter through over 3,000 funds by various criteria such as Morningstar ratings, investing strategy, and yield, among others. From the search results, investors can swiftly execute purchases directly.

Additionally, E-Trade provides pre-built ETF portfolios tailored to different strategies like aggressive, conservative, and income, each comprising varying proportions of stocks, bonds, and cash. Detailed information on the stocks within each fund is also accessible. Investors can explore themed investments such as energy powerhouses or large-cap giants.

Furthermore, E-Trade offers extended trading hours for a select few highly traded ETFs, ensuring liquidity even outside regular market hours.

  • Trade commission: $0
  • Minimum amount to open a brokerage account: $0

Firstrade has embraced commission-free trading across its entire ETF selection, boasting a robust offering of over 2,200 funds for customers to explore. The platform also grants free access to Morningstar research, aiding investors in navigating the extensive ETF options and choosing suitable funds for their portfolios. An ETF screener further facilitates fund discovery based on performance metrics, analyst ratings, or specific criteria of interest.

For additional support, customer service representatives are available via phone Monday through Friday, offering extended business hours to address queries. Firstrade’s user-friendly mobile trading app enables convenient portfolio tracking and allows for trading on-the-go.

  • Trade commission: $0
  • Minimum amount to open a brokerage account: $0

Merrill Edge has joined the zero-commission trend for ETF trades, offering investors an accessible entry into the ETF market. Their Select ETFs screener streamlines the search process, especially useful if you have specific criteria in mind like fund size, asset class (stocks or bonds), or investing style (value, growth, blend). Whether you’re targeting large American growth companies or other categories, the screener facilitates quick identification. While iShares and Vanguard funds are frequently recommended, Merrill’s platform supports a broad range of ETF options.

Users can explore a diverse selection of ETFs using predefined screens such as Morningstar 5-star stocks, though initial screen results may be more concise. Detailed information including top holdings, performance metrics, ratings, and key statistics are available upon further exploration.

  • Trade commission: $0
  • Minimum amount to open a brokerage account: $0

Ally Invest initially lagged in offering commission-free ETFs but has since embraced the industry shift, now providing a wide array of options, including iShares and Vanguard funds. Their platform features a robust screener allowing users to filter funds by categories like tech ETFs or S&P 500 index funds, complete with performance metrics, Morningstar ratings, and top holdings data for each ETF.

Ally is particularly appealing for existing customers of highly rated Ally Bank, seeking to seamlessly expand their financial services to include brokerage options.

  • Trade commission: $0
  • Minimum amount to open a brokerage account: $0