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ETFs or Exchange Traded Funds are fast becoming some of the most popular assets to trade in the market today. These are funds that are traded on the major exchanges in just the same manner as stocks. There are however a few key differences that make ETFs an attractive choice if you are looking for a balanced, well-diversified portfolio.
ETFs are essentially hand-selected funds that are made up of several different assets from a particular area. These could be stocks, bonds, commodities, or more and are typically linked to a specific economic sector, though not always.
Here we have not only featured some of the top ETF brokers you can choose from but will also go in-depth on some of the reasons why trading in ETFs could be a suitable option for you.
Why ETFs Are a Popular Choice?
There are a few important reasons why traders choose Exchange Traded Funds when building their portfolio. These reasons may also be something that applies to your own trading style and journey:
Diversification: An ETF as a result of its very nature should be well-diversified. Since they are essentially baskets of stocks or other assets formed from a number of areas usually within a particular sector, an ETF offers broader exposure to an industry. The US Global Jets ETF for example offers access to more than 30 airline stocks balanced across the industry.
Cost-Effectiveness: Trading ETFs is much like trading in Mutual Funds, though often without the fees. With many of the top ETF brokers we have listed allowing fee-free, and commission-free trading of ETFs, this is an ideal time to get involved with the asset.
Expertly Chosen: ETFs are created with a number of parameters under consideration. They can also often be built to emulate another particular index. Elements such as risk-level, return on investment, portfolio balance, and more are all considered. This can make such an investment an ideal choice over single stock picks particularly if you are new to trading or would like to aim for a certain level of consistency.
Top 5 ETF Brokers
Firstrade has been around since 1985. They have capitalized on this experience by abiding by all SEC and FINRA regulations while also cultivating a truly huge range of ETFs to trade in a completely commission-free environment.
There are no less than 2,000 ETFs available to trade with this broker. These trade on all of the biggest markets in the US including the NYSE and NASDAQ and come from more than 100 top providers. On top of being commission-free, trading ETFs through Firstrade will also attract no trading fees at all.
Overall, Firstrade has one of the most comprehensive offerings if you are looking to get started and add some ETFs to your portfolio. They also make this process extremely accessible thanks to the fact they have no account minimum required to get started.
- Commission-free trading on all available ETFs
- A great range of choice with thousands available
- Hugely experienced broker in the industry
- You can only trade ETFs from 5 major exchanges
M1 Finance is unique in that they operate as a type of robo-advisor hybrid. While you can customize your own investments and choose from almost any ETF that is listed on the NYSE, NASDAQ, or BATS, the majority of traders with this broker choose from the almost 100 expertly curated investment “pies”.
Within many of these dedicated portfolios that effectively auto-trade for you once you are invested, you will find some that are dedicated to ETFs only, and others that feature ETFs as part of their composition. Beyond the initial curation that goes into creating the ETF, M1 Finance experts further apply their own methodology to selecting which ETF investments to include in their portfolios.
This dual screening process ensures you should have access to all of the best ETFs to fit your trading needs, and with commission-free trading and very few other fees to consider as well as an extremely easy to use trading platform and continually evolving additional infrastructure and unique features.
- Fractional ETFs can be traded with ease
- You can select your own ETFs or choose from pre-selected portfolios
- Very few fees including no-commission on ETFs
- The exact trade execution time is outside your control
Public.com is another hugely innovating, and very popular broker where you can access almost any US-listed ETF on the market alongside the thousands of individual stocks they have to offer. If you are looking for ease of use in trading ETFs, then Public.com is the place to go.
Everything here is app-based and accessible through their mobile platform on Android or iOS. You can browse through the hundreds of ETFs and thousands more stocks easily since they are grouped by theme.
Once again, Public.com is completely free to use and trade with. This means you can trade in any of the ETFs or stocks they do offer, completely fee and commission-free. Added to that, you do not have to purchase whole shares in any of their ETFs. You can instead avail of fractional share trading that is also applied to ETFs. This allows you to get a “slice” of the ETF at a proportionate cost to a whole share and can help you further diversify.
- Extremely accessible ETF trading through their mobile app
- Access to social trading features can provide insight
- Completely commission-free with no account minimums
- Only mobile trading is available
Interactive Brokers is another commanding broker presence in the industry that has been around for many years and developed one of the most respected reputations thanks to their transparency, regulation, and excellent value.
This extends to their offering in the sphere of ETFs. You will find an extensive range of choices available including not only those from the US but a total of 28 exchanges in 14 countries. Such a number may require further research to choose between ETFs and you can start on this with the unique mutual fund/ETF replicator if you would like to find the ideal ETF for your portfolio.
Interactive Brokers now offers many no transaction fee ETFs and provides for a great all-in price of $0.005 per US share on many of their most popular ETF trades.
- Access to a worldwide selection of ETFs
- Unique features like the ETF replicator to help you identify assets
- Not always completely fee-free when trading ETFs
Take a look at Interactive Brokers website for more information and to start trading ETFs now.
TD Ameritrade is of course one of the most credible broker names in the industry for US traders. They offer an extensive and award-winning infrastructure in trading all assets as you would expect from such a longstanding broker.
With a focus on ETFs they provide very well in this area. You will have access to more than 2,000 exchange-traded funds many of which come from the top providers in the industry such as iShares and others. With TD Ameritrade many of these ETFs are also available on a commission-free basis in keeping with the current trend.
A unique and valuable feature you will have here is a great degree of research included from the Morning Star service. This, in addition to the excellent ETF screener feature can assist you in choosing the best ETFs that fit both your trading goals and risk profile.
- A hugely trusted and respected industry name
- Wide range of ETFs available alongside further research tools
- High fees for margin trading
If you think this is the ETF broker choice for you, head to the TD Ameritrade website to get started.
Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.