Mutual funds offer a two-for-one deal in the investing world: a single investment product with built-in diversification. They are an excellent tool for long-term investors seeking a diversified portfolio consisting of a collection of investments rather than a long list of individual stocks or bonds to monitor. 

If you’re still wondering when is the best time to invest in mutual funds, our answer is NOW. 

Here’s why: 

Many of the previously more expensive players have reduced or eliminated fund investment thresholds. Some brokers have even gone so far as to eliminate management fees entirely, launching a few zero-fee index funds. 

The number of no-transaction-fee mutual funds — funds in which you can invest without paying any commission — is continuously increasing at many providers.

Discount brokers that serve fund investors are in a tight race to the top. All of the brokers in this article provide a variety of low-cost funds and resources to help you manage your portfolio effectively. 

If you’re looking for the best mutual fund brokers out there, you’re in the right place. To help you narrow down your options, InvestingBosses has compiled a list of the best brokers for mutual fund investors. For each one on the list, we’ll be looking at the PROs and CONs of each Mutual Fund Broker, what makes it stand out, and its common limitations. 

Let’s get started! 

1. Fidelity

The first one on our list is (as you may have guessed) Fidelity. Fidelity is one of the most well-rounded brokerages available today. There are no fees for trading stocks, ETFs, or options, and there is a choice of index funds with no expense ratio.

PROs: 

• No commissions on stock, ETF, and options trades.
• A large number of research providers are available.
• Excellent customer service.
• Index funds with no fees.
• Excellent mobile app.

CON:

• Broker-assisted trade fees are relatively high.

Where Fidelity Stands Out

Fidelity Investments provides a well-rounded offering with no trading commissions, no account fees that can reduce returns, a wide range of research options, and an easy-to-use platform that can also be tailored for more advanced traders.

Fidelity is also well-known for its mutual funds. With a wide selection of no-transaction-fee funds, such as its Fidelity Zero index funds, which have no expense ratio and zero-minimum investment requirement, the broker performs well across all fund categories. Customers benefit significantly from these investor-friendly practices.

Educational resources for all levels of investor: Fidelity’s educational resources and research options are among the best among the brokers we reviewed, with resources for both beginning retirement investors and active stock traders.

Fidelity’s Limitations

Tradable securities: While it provides fractional shares and options trading, the lack of futures and forex trading options results in a 3-star rating for tradable securities.

Broker-assisted trade fees: At $32.95, Fidelity’s broker-assisted trade fee is higher than we prefer.

2. Merrill Edge

Next on our list is Merrill Edge. This mutual fund broker is another popular choice for a lot of investors because it provides high-quality research as well as free stock and ETF trades indefinitely. In addition, Merrill clients have access to customer service at approximately 4,300 Bank of America locations.

PROs

• Strong third-party research.
• It is already integrated with the Bank of America.

Cons

• There may be fewer securities available to advanced traders.

Where Merrill Edge Stands Out

There are a few notable things about Merrill Edge that make it stand out from the rest.

Bank of America integration: Merrill Edge is a result of Bank of America’s acquisition of Merrill Lynch, and it’s pretty evident that the parent company has worked hard to create a unified experience for clients who use both services. With a single login, you can access Bank of America and Merrill Edge accounts, and real-time transfers transfer money between accounts instantly.

Data and research: Merrill Edge’s powerful combination of robust research and competitive pricing appeals to casual traders.

Educational materials: Merrill Edge has an Idea Builder tool to help newer investors find investments that appeal to them, such as ESG products, and a library of educational content, a podcast, videos, webinars, virtual events, and free tools and calculators.

Merrill Edge’s Limitations

Choosing an investment: There may be fewer securities available to advanced traders.

Shares in fractions. Investors can purchase fractional shares by the dollar amount rather than the share amount. This makes diversification much easier — and more affordable — but Merrill Edge does not provide this capability.

3. E*TRADE

Even without its $0 commissions, E*TRADE stands out with excellent educational resources, portfolio-building tools, and a large mutual fund selection.

Pros

• Simple to use tools.
• A large investment selection.
• Excellent customer service.
• Access to extensive research resources.
• A sophisticated mobile app.
• Trade stocks, options, and ETFs without paying a commission.

Cons

• The website might be a bit tricky to use.

Where E*TRADE Stands Out

There’s something for everyone: E*TRADE has a platform and a mobile app for everyone, whether you are a newbie or a professional trading expert. The E*TRADE Web platform and mobile app provide real-time quotes and market commentary, stock and ETF screeners, and account management. Technical studies, drawing tools, customizable options chain views, trading ladders, and other features for complex strategies are available on the Power E*TRADE platform and app for more active traders.

Investable securities: E*TRADE provides a diverse range of investment options, including stocks, bonds, ETFs, and over 4,300 no-transaction-fee mutual funds, as well as futures and advanced options strategies.

Educational resources and assistance: E*TRADE’s educational resources and support options are among the best available. You can also watch webinars on topics such as diversification and technical analysis, as well as more complex topics such as options trading. Morningstar offers online investing courses on various topics, as well as a thematic investing section that explains how to invest in companies that share your values.

E*TRADE’s Limitations

Transparency on the website: Our testers examined E*TRADE’s website and were unable to locate the company’s required account minimum or instructions on how to close an account, both of which should be easily accessible.

4. TD Ameritrade

TDAmeritrade, with its $0 minimum, free tools and research, and several trading platforms for both rookie and advanced traders, is definitely hard to beat.

Pros

• No-commission stock and ETF trades.
• Free investigation.
• Trading platforms of exceptional quality.
• There is no account minimum.
• Excellent customer service.
• A large investment selection.

Cons

• There are no fractional shares.

Where TD Ameritrade Stands Out

Free research: The Federal Reserve Economic Database, the Center for Financial Research and Analysis, and Morningstar are just a few of the prominent third-party research sources available through TD Ameritrade.

High-quality trading platforms: In addition to TD Ameritrade’s web and mobile platforms, the platform provides professional-level trading on desktop and mobile.

Customer service: TDAmeritrade’s customer service is hard to beat, with 24/7 support via phone, text, fax, live chat, email, or social media, as well as in-person meetings at over 250 branches.

Large investment options: From a large selection of low-cost mutual funds to advanced products like futures and forex trading, TD Ameritrade has something for everyone.

TD Ameritrade’s Limitations

Fractional shares were once considered a niche product, but major players such as Fidelity and Schwab now offer fractional trading. However, TD Ameritrade is still not, so investors with limited capital may want to look somewhere else. Fractional shares let you invest by the dollar amount rather than the share, allowing you to build a portfolio of stocks that would otherwise be too expensive.

5. Interactive Brokers

Next on the list is Interactive Brokers. With low per-share pricing, an advanced trading platform, a large selection of tradable securities — including foreign stocks — and ridiculously low margin rates, Interactive Brokers attracts 

active traders. IBKR Lite, its new offering, provides commission-free trades of stocks and ETFs.

Pros

• A large investment selection.
• Excellent research and tools.
• Over 17,000 mutual funds with no transaction fees.
• Users of NerdWallet who sign up for IBKR Pro receive a 0.25 percentage point discount on margin rates.

Cons

• The website is also a bit tricky to use.

Where Interactive Brokers Stands Out

Lite IBKR: Interactive Brokers has long been a popular broker for advanced traders, but in 2019, the company introduced IBKR Lite, a lower-tier service for more casual investors. IBKR Lite provides unlimited free trades of stocks and exchange-traded funds listed on US exchanges.

Investment selection: If you want to trade other investments, such as options, futures, mutual funds, fixed income, and more, you can do so with a Lite account on 135 exchanges in 33 countries, but the trading costs will be the same as what IBKR Pro investors pay.

Platform for advanced users: IBKR Pro, as the name suggests, is designed for advanced traders. If this describes you, you’ll appreciate the broker’s per-share pricing of $0.005 (the minimum is $1), advanced trading platform, unrivaled range of tradable securities — including foreign stocks — and ridiculously low margin rates.

Both service tiers have a $0 account minimum and provide fractional shares of stock. Not just that, there are no account maintenance or inactivity fees with IBKR Lite or IBKR Pro.

Interactive Brokers’ Limitations

Website usability: Interactive Brokers’ website contains a wealth of information, but finding and interpreting that information isn’t always simple. The various commission and fee structures for IBKR Pro customers can make determining your costs difficult. The website has sections dedicated to institutional, broker, and proprietary trading accounts, which can be confusing.

6. J.P. Morgan & Co.

Another one on the list is the biggest bank corporation in the United States— J.P. Morgan & Co.

J.P. Morgan & Co. Self-Directed Investing has no commissions and a well-integrated app, making it an excellent choice for those who would rather trade their own investments — particularly existing Chase customers.

Pros

• Simple to use platform.
• There are no commissions.
• The app connects all of your Chase accounts.
• There is no account minimum.

Cons

• Limited research and tools.
• The Portfolio Builder tool requires a $2,500 balance.

Where J.P. Morgan Self-Directed Stands Out

Simple to use platform: This is a simple way to get started investing in stocks and managing your portfolio using a single web trading platform.

The app connects all of your Chase accounts: If you already have a Chase account, the capability to view all of your Chase accounts, from checking to investments, in one place may appeal to you.

There is no account minimum: You can immediately start saving and investing with whatever amount works for you because there is no account minimum.

J.P. Morgan Self-Directed’s Limitations

Tools and research are limited: While the research and data are from reputable sources such as Morningstar, J.P. Morgan, and the global investment research firm CFRA, J.P. Morgan Self-Directed Investing does not have as many third-party research providers as other brokers.

The Portfolio Builder tool requires a $2,500 balance: While the Portfolio Builder tool is extremely useful, the $2,500 requirement may keep it out of reach for some new investors.

7. Firstrade

Firstrade is one of InvestingBosses’ top picks for discount brokers, offering no commissions on trades (including all mutual funds) and a $0 account minimum.

Pros

• No commissions on stock, ETF, and options trades.
• On option trades, there is no contract fee.
• All mutual funds are fee-free.
• Chinese language options are available.

Cons

• There is no 24-hour customer service.

Where Firstrade Really Stands Out

Platform for trading: Firstrade offers three trading platforms: a desktop platform, Options Wizard, and Firstrade Navigator, as well as a highly rated iOS and Android mobile app.

Firstrade is one of the few brokers we review that does not charge a per-contract fee for options trades.

Firstrade’s Limitations

Professional investors may be disappointed that Firstrade does not offer forex, futures, or futures options trading in addition to its rock-bottom pricing on options trades. However, retirement investors have more than enough options with Firstrade to build and manage their portfolios.

8. Ally Invest

Ally Invest, our pick for one of the best low-cost brokers, does it all — but it’s especially good for active traders.

Pros

• Trades in eligible US stocks, options, and ETFs are free of commission.
• There is no account minimum.
• A solid web-based platform.
• Strong research and tools.

Cons

• There are no no-transaction-fee mutual funds.
• There are no branches.

Where Ally Invest Stands Out

Costs: With $0 trading costs on eligible US securities, no account minimum, and low-cost options trading, Ally Invest appeals to both novice and experienced stock traders.

Ally doesn’t just compete on price with the major online brokers; it also provides extras like forex trading, an automated portfolio management option, and a suite of free tools for technical investors.

Uninvested cash in an Ally Invest brokerage account earns no interest, but Ally invest offers instant money movement between Ally savings and brokerage accounts, allowing investors to take advantage of interest rates several times higher than most brokerages’ typical default sweep interest rates. This does, however, necessitate the opening of a separate Ally savings account.

Ally Invest’s Limitations

There are no no-transaction-fee mutual funds: Mutual funds are a convenient way to diversify your portfolio, but Ally Invest offers no-transaction-fee mutual funds.

There are no branches: You’ll have to look elsewhere if you want to schedule an in-person meeting.

9. Vanguard

Vanguard’s low-cost model and large fund selection make it a good choice for long-term investors, but the broker lacks the robust trading platform that active traders require.

Pros

• A large selection of mutual funds.
• Trade stocks, options, and ETFs without paying a commission.
• The market leader in low-cost funds.

Cons

• Simple trading platform only.
• Data and research are scarce.

Where Vanguard Stands Out

A wide range of mutual funds: Vanguard offers over 3,300 no-transaction-fee mutual funds, as well as a growing selection of proprietary, low-cost, socially responsible mutual funds and ETFs.

Low-cost fund leader: The firm is well-known for its index funds and exchange-traded funds, which have expense ratios that are significantly lower than the industry average. Vanguard’s service and selection are hard to beat for long-term investors looking to pair a buy-and-hold strategy with the lowest-cost offerings.

Vanguard’s Limitations

Platform for trading: Vanguard’s trading platform is basic, and it lacks the analytical tools that most brokers that support stock trading provide.

Investment minimums: Most Vanguard retirement funds and the Vanguard STAR Fund have $1,000 investment minimums, while other Vanguard funds have $3,000 minimums. The initial minimum purchase amount of $1,000 to $3,000 will be prohibitively expensive for many new investors.

10. Charles Schwab

Last but definitely not least in our Top 10 Mutual Fund Brokers list would be Charles Schwab because it provides the educational resources that beginners will need to navigate the world of investing. At the same time, sophisticated tools and no-commission trading will entice active traders.

Pros

• There are three platforms with no minimums or fees.
• Excellent mobile app.
• Extensive investigation.
• A large fund selection.
• Trade stocks, options, and ETFs without paying a commission.

Cons

• The default cash sweep rate is low.

Where Charles Schwab Stands Out

Offering that is well-rounded: Charles Schwab caters to all types of investors: Beginner investors will appreciate the company’s $0 account minimum, while active traders will appreciate the $0 commission on stocks, options, and exchange-traded funds.

Extensive research: Schwab is praised for its research offerings, which include its own equity ratings as well as analyses and commentary from the industry’s top research firms.

Fund selection: Schwab offers a wide range of funds with low expense ratios and no transaction fees.

Charles Schwab’s Limitations

Smaller fractional share selection: Schwab provides access to fractional shares of S&500 stocks. While these are the stocks that many investors are looking for, other brokers that offer fractional share trading have a broader selection.

The Bottomline

Selecting the perfect mutual fund broker for your stock journey can be time-consuming and tedious if done incorrectly. If you’re not sure which one is best for you, consulting with a stock expert can be a great idea. Check out this resource the next time you’re looking for the best mutual fund broker.