Best Brokers for Mutual Funds

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Contributor, Benzinga
June 30, 2023

Benzinga readers love Interactive Brokers and E*TRADE as the best brokers for mutual funds.

Regarding investment choices, it’s pretty safe to say that if you’re like many individuals, you’re looking for investments that can anchor you in safe waters, and at the same, can also make you lots of money. Mutual funds, if chosen carefully, can be a great way to invest and achieve both objectives. That's why you need to know about the best brokers for mutual funds.

Each investor is different, and you could be looking into a wide variety of tools and resources in a mutual fund broker. Once you know what you’re looking for, the breakdown below can serve as a helpful guide for finding a best-broker match for you based on mutual fund selection, skill level and financial situation. Here is Benzinga's list of the best brokers for mutual funds.

6 Best Brokers for Mutual Funds

When searching for the best brokers for mutual funds, you need to locate brokers that have a reputation and history of mutual fund investing. Here are some of Benzinga's favorites.

1. Best Overall: Interactive Brokers

Interactive Brokers offers access to 150 markets and serves clients in over 200 countries.

The IBKR Mutual Fund Advantage:

  • 46,000+ funds from over 520 fund families including Allianz, American Funds, BlackRock, and Fidelity
  • 18,000+ funds with no transaction fees
  • Other funds available at low commissions with no custody fees
    • Inside the US: The lesser of USD 14.95 or 3% of trade value
    • Outside the US: EUR 4.95 or currency equivalent
  • IBKR is neutral – no proprietary funds
  • Free Mutual Fund Search tool to help you find the right funds
  • Available worldwide

Pros

  • Global trading is an option on this plaform
  • IBKR has the most mutual funds to choose from
  • The mutual fund search tool is free and makes it much easier to find the funds that will match your strategy

Cons

  • The site is neutral, but sometimes it’s nice to have proprietary funds in which you could invest and further diversify

2. Best for Versatility: E*TRADE

When you work with E*TRADE, you likely arrived there because of their commercials. You might have considered investing in mutual funds and gotten a recommendation from friends or family. Either way, the platform offers several benefits, including:

  • Quality trading platform with sophisticated tools
  • Several tradable assets
  • Superlative customer service
  • Easy mobile trading
  • Helpful tutorials
  • Free mutual fund trades unless the $19.99 transaction fee is noted

With a recently reimaged website, E*TRADE allows you to invest every day, save for retirement or hold assets until you plan to expand your portfolio. This opens a portal to several powerful options that help improve your financial situation:

  • Simple dashboard; user-friendly and logical
  • Probability calculator
  • Strategy optimizer
  • Continuing education for traders

Pros

  • You get excellent customer care that allows you to take care of your account without any worry
  • There is a probability calculator that you can use to fine tune your investments
  • There are strategy optimization options on the site that help you better match up with your desired goals

Cons

  • There could be a transaction fee on some of your mutual fund trades. So, please be aware of when that fee is noted.

3. Best for Long Term Investors: Magnifi

Magnifi is a marketplace that allows you, as an investor, to use common brokerage tools and AI to make the best decisions for your portfolio. Because you can pull up all the information you need on a given asset, you can easily invest in the assets that will give you the results you deserve and better match your strategy.

Search for the investment options that meet your needs, invest in specific categories or scan for assets in a price range that’s affordable for you.

Best for long-term investors and those who require a bit of client support, you can also learn more about investing from this platform, utilize the AI-powered investing assistant, enjoy commission-free investing, try the mobile app and take advantage of over 15,000 possible investment options. This makes Magnifi a good place to trade for both seasoned and novice traders.

Pros

  • You can pull up the most accurate information on every asset without a problem
  • You can invest here whether you are an experienced or a new investor
  • You can more easily match up your strategy to the assets you find

Cons

  • Because you are buying into an AI platform, you need to decide how much you want the AI to help you, and that can be a tough choice for every investor

4. Best Broker for Number of Options Available: Vanguard

Vanguard offers over 16,000 mutual funds from leading fund families and NTF funds. Of these funds, Vanguard has you covered across the board when it comes to varying objectives, asset classes and risk exposure. More than 2,000 are no load, no transaction fee (NTF) funds. Expense ratios are well below 0.50%, and some are even below 0.10%.

Pros

  • With over 10,000 mutual funds to choose from, the mix of no-load and NTF funds is enough to make diversification simple
  • Vanguard tends to keep its expenses ratios as low as possible
  • Vanguard offers a great many other investment options that can help you diversify your portfolio

Cons

  • While Vanguard bills itself as a place where you can feel like an owner of a much larger portfolio, you must remember that not all platforms will serve your every investment need perfectly

5. Best for No Load, No Transaction Fees: Charles Schwab

A no transaction fee mutual fund (NTF) is a mutual fund that doesn’t charge trading fees. Typically, they’re bought directly from the mutual fund company or through a discount brokerage. Charles Schwab doesn’t have the most robust list of mutual funds at just over 5,000, however, the bulk of these mutual funds are transaction fee-free.

The 3,100 funds that have no load or no transaction fees actually make it one of the largest groups of no-load, no-transaction-fee funds among discount brokers. While it’s a hefty price to buy ($76, it’s $0 to sell Schwab’s mutual funds).

Pros

  • The mix of mutual funds tends to satisfy most investors
  • Schwab is a place where you can also do more retirement planning, if that is why you’re investing
  • The Schwab name engenders a bit of goodwill that other platforms simply cannot provide.

Cons

  • The buy price might be more than you bargained for

6. Best for Retirement Savers: TD Ameritrade

Award-winning broker TD Ameritrade is a good place to invest in mutual funds, irrespective fo the scope of your investment. Mutual funds are an excellent option for those who are planning for retirement or who simply wish to settle into a conservative investment that can provide steady returns.

There are well over 13,000 funds from which you can choose when you use the TD Ameritrade platform, and you can move from the browser to your phone with ease as you manage your portfolio wherever you are.

All funds offered on TD Ameritrade has no transaction fees, you can research these investments with ease, set up screeners to monitor the best investments on the market, etc. In fact, the only fee you pay for mutual funds on TD Ameritrade is the buy no-load funds.

Pros

  • It’s easy to invest on this site because you can quickly move from your computer to a mobile device at a moment’s notice and all your account information is integrated instantly.
  • There are over 10,000 mutual funds to choose from, and they cover a wide range of investment options, meaning that you can also buy and sell, for example, no-load funds as you see fit

Cons

  • Fees could add up quickly for experienced investors who wish to buy into no-load funds

What are Mutual Funds?

In plain English, a mutual fund is an investment fund that pools money from many investors (including individuals, companies and other organizations) to purchase stocks, bonds and other securities. The reason for this collective approach is that this type of basket of securities (otherwise known as a portfolio) might be tough, if not downright impossible, to recreate on your own.

Just as all the currencies of the world are vastly different from one another, mutual funds can be quite different as well. Here are just a few possible mutual fund characteristics:

  • Focused on long-term growth
  • Focused on short-term growth
  • Invested in stocks
  • Invested in bonds
  • A mix of both stocks and bonds

Why Might I Need a Mutual Fund?

You might be an investor who’s looking for a retirement vehicle, or maybe you’ve identified your goals and you know you want a short-term investment. Whatever your ultimate goals are, the biggest benefit to a mutual fund is that it’s automatically diversified. In other words, there’s less risk involved because of that giant pool of securities. If things go wrong in a company, other companies in a mutual fund portfolio might still do well, so the fund’s overall net worth, or net asset value, won’t be as negatively affected.

You also might need a mutual fund to achieve specific goals. If you’re planning on retiring at some point in your life, a mutual fund might be worth looking into. If you’ve got a short-term savings goal but can’t risk losing every penny, you might look no further than a mutual fund. There are so many reasons people choose mutual funds. And to be honest, some just aren’t aware of the differences and invest in the same thing Neighbor Bob invested in last month. (A bad idea, by the way.)

Mutual Funds Compared to Individual Stocks

How are mutual funds different than individual stocks? Mutual funds can be a conglomerate of stocks, and unlike a stock, mutual funds are diversified because you’re investing in a whole bunch of stocks at once. Standalone stocks are a major risk because you’re investing in 1 versus a whole group of them.

Pros and Cons of Mutual Funds

Besides diversification, there are several other pros for mutual funds. Unfortunately, mutual funds have a few downsides as well.

Pros:

  • They’re professionally managed.
  • They’re liquid.
  • You can find anything to match what you’re looking for, including risk tolerance and investment horizon.

Cons:

  • Management fees can be high.
  • You’re locked in (depending on the type of fund you invest in, you could be locked in for a required amount of time, like five years).
  • Operating expense fees can also cause your money to take a hit.

How to Look for Mutual Funds

When it comes to research on individual mutual funds, Morningstar could be your best friend. A ticker symbol-friendly website, Morningstar can help you find new investments (and filter out all the bogus information that exists out there).

However, once you decide which mutual funds you want, you’re going to need a way to purchase them, so you need one of the best brokers for mutual funds. This is where a lot of questions arise, and it's important to explore your questions before you settle on a final decision.

Discount vs. Full-Service Brokerage for Mutual Funds

If you’re trying to decide between a discount or full-service brokerage, there are a few differences. And of course, it depends on what you’re looking for. Brokerage accounts allow you to buy and sell stocks, bonds, ETFs and more (mutual funds are included in this list). In contrast, full-service brokers offer more products and services, including planning for retirement, tax advice, and portfolio review.

Because services are more comprehensive, typically, fees are a bit higher with full-service brokerages. If you feel you need more hand-holding, a full-service broker might be what your life is missing. However, if you crave speed and a mutual fund on the cheap, you know you’re better off with a discount broker. Here are a couple of other things to consider:

  1. Fees. Fees aren't the only consideration, but they should be a part of your decision-making process.
  2. Your goals. Your goals should also be a major consideration in your decision to invest in a mutual fund. What is your time horizon? When will you need your money?
  3. Load and no-load mutual funds. A loaded mutual fund typically charges a front-end or back-end load or cost, or a percentage of the amount invested, usually one to five percent. It’s a good idea to get a sense of what those fees will entail.

Find Your Best Broker for Mutual Funds

Take time to find a broker that meets your needs, and your trading process is sure to go more smoothly. There is a platform for every investor, and each has its own unique offering of tools and resources to support you.

Get started now with 1 of our recommended brokers for mutual funds.

Want to learn more about mutual fund investing? Check out Benzinga's guides to the best no-load mutual funds, the best socially responsible mutual funds and the best technology mutual funds.

Frequently Asked Questions

Q

What are the types of mutual funds?

A

The types of mutual funds include bond, stock, money market mutual funds and hybrid funds.

Q

Where can I find a list of the best brokers for mutual funds?

A

You can find a list of the best brokers for mutual funds above.

Q

Are mutual funds a liquid investment?

A

Yes, mutual funds are considered a liquid investment.