7 best ETF brokers 2024
Are you looking for a way to invest your money that is cost-effective, has high liquidity, and will allow you to reach your investment goals? If so, an exchange-traded fund (ETF) may be the perfect choice. An ETF is a type of fund that tracks specific markets or indexes. It can be bought and sold like a stock, and it operates like an index fund.
However, unlike traditional mutual funds that are priced at end of day valuations, ETFs have real-time valuations which makes trading them much cheaper than traditional index funds. In this article, we discuss what exactly an ETF is, the best brokers that offer these types of assets, and more.
Start investing in ETFs now with eToro!What Is an ETF Broker?
To understand what an ETF broker is, it’s important to first understand what an ETF is in the first place. An ETF is a type of fund that holds a collection of stocks. It holds these stocks in order to track the performance of an index. An ETF can track any type of index – from commodities to real estate to stocks. The ETF manager chooses the stocks that the ETF will hold based on the performance of the index.
An ETF broker exchange is a site or app where investors can buy and sell ETFs. It’s important to find a reputable broker so you can be sure you’re getting a fair deal on your transactions. The major advantage of buying and selling ETFs through a broker is that you can act quickly and transact your desired amount of shares with the click of a button. Since ETFs are traded on stock markets, the majority of ETFs are highly liquid and easy to sell at any time. In fact, you can sell your ETF shares as frequently as you want to keep your investment portfolio in tune with your goals.
Top 7 Brokers to Buy ETFs Online
RoboForex
RoboForex is a well-established brokerage company offering a broad spectrum of trading opportunities for active traders and investors alike. With an impressive selection of over 12,000 financial instruments - including currency pairs, CFDs on stocks, indices, metals, energies, and futures - RoboForex provides a versatile trading environment.
The broker boasts competitive trading conditions: tight spreads starting from 0 pips, high leverage up to 1:2000, and fast execution speeds. The broker also offers the CopyFx investment program, which allows traders to copy the strategies of successful investors and earn passive income. Additional perks include instant fund withdrawals and some of the industry’s highest affiliate payments (up to 84%).
RoboForex prioritizes reliability and client satisfaction, establishing itself as a trusted partner for traders worldwide.
TeleTrade
TeleTrade is a global broker serving clients worldwide. They offer trading on Forex, indices, stocks, metals,cryptocurrencies, and energies. While lacking PAMM accounts and certain investment options, TeleTrade boasts a robust copy trading service, a strong affiliate program, and diverse account types (ECN, NDD, crypto). With sufficient leverage (up to 1:500) and spreads from 0 pips, the broker caters to various trading styles, including scalping, intraday trading, and medium to long-term strategies.
TeleTrade supports traders with market analytics, expert forecasts, an economic calendar, and a comprehensive education section on their website.
eToro
The eToro broker was founded in 2007. The company promotes itself as a social trading platform working with traders from over 140 countries. The broker has several divisions operating under different jurisdictions and licensed by different regulators. For example, eToro (Europe) is licensed by the Cypriot regulator CySEC (109/10) and eToro (UK) is licensed by the British regulator FCA (583263). The broker also has a representative office in Australia and the USA.
eOption
The eOption broker (eoption.com) is an American stockbroker headquartered in Glenview, Illinois. It has been operating since 2007 and is a member of FINRA (CRD#: 7297/SEC#: 8-21765) and SIPC. It specializes in options trading and also acts as an intermediary in trades involving the popular securities classes. The company offers low trading commissions, super-fast execution of orders, and modern platforms with an advanced set of analytical tools. In 2020-2021, eOption was recognized as the best options broker by several resources such as Investopedia, The Tokenist, Benzinga, Investormint, and NerdWallet.
DEGIRO
DEGIRO is a Dutch investment company operating since 2008. The broker has been providing online services since 2013. Today DEGIRO is headquartered in Amsterdam and has offices in 18 European countries. Its activities are controlled by the Financial Conduct Authority (FCA, 574048), as well as regulators in the Netherlands: Financial Markets Authority (AFM, 12048408) and Central Bank (DNB, R128868). DEGIRO was awarded over 86 international awards: financial publications of Germany, France, Denmark, and the Netherlands have repeatedly recognized the company as the best stock market broker. How to open a DEGIRO account
Admirals
Admirals was founded in 2001. In more than 20 years of operation, a regional Estonian broker has grown into an international financial group of companies providing access to over-the-counter markets in more than 130 countries, as well as to exchange-traded stock instruments. Following the 2021 rebranding, Admirals became Admirals. The updated platform received new integrated risk management solutions.
The Admirals group of companies comprises:
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Admirals AU Pty Ltd.
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Admirals UK Ltd.
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Admirals Cyprus Ltd.
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Admirals AS Jordan Ltd.
Regulators of the Admirals group of companies include FCA (UK, 595450), CySEC (Cyprus, 201/13), ASIC (Australia, 410681), JSC (Jordan, 57026), and CIPC (South Africa, 2019 / 620981 / 07).
4XC
4XC offers access to trading Forex, metals, indices, oil, forward contracts, and cryptocurrencies, over 80 trading instruments in total.
4XC provides competitive conditions such as leverage up to 1:500 and spreads starting from 0.0 pips. The broker supports multiple account types including Standard, Pro, and VIP, each tailored to meet different trading needs and strategies.
For passive investing, the broker provides PAMM accounts and social trading service. The Signal Centre at 4XC enhances trading with premium AI signals integrated via the easy-to-use Acuity Trading Tool plugin, which seamlessly integrates into MetaTrader 4/5 platforms. Also, the broker provides additional free trading signals on its website.
What Are Typical ETF Investing Costs?
It is important to note that the cost of investing in ETFs varies, just like any other investment. ETF costs are similar to those of traditional index funds and mutual funds.
However, ETFs are much cheaper to trade relative to traditional index funds. This is due to the fact that ETFs have real-time valuations, whereas traditional index funds prices change at the end of the day. When an ETF is bought or sold, therefore, the order is immediately matched with a seller or buyer. Index funds, on the other hand, are priced at the end of the day which means the price is determined by the closing share price.
Because of the higher volume of ETFs relative to traditional index funds, the bid-ask spread for ETFs is typically lower than for mutual funds. Another cost that is often associated with ETF investing is the expense ratio. The expense ratio is the annual fee that is charged for managing the fund. It’s expressed as a percentage of your investment: a 1% expense ratio costs $10 a year for every $1,000 you invest in the fund. The expense ratio for ETFs is often lower than for traditional index funds. This is because ETFs are actively managed, meaning there are people working to make sure the fund is meeting its investment objectives. Index funds, on the other hand, are passively managed.
Stock commissions can apply to ETFs because they trade on an exchange. However, many brokers have eliminated trading commissions, so you can buy and sell ETFs for free.
9 Best ETFs to Buy NowHow to Choose the Best ETF Broker
There are a few key factors to consider when choosing an ETF broker. These factors will help you choose the best broker for your needs and goals. The factors you should consider when choosing an ETF broker are:
Trading costs
Platform and usability
Investment options
Customer service Security
Ease of use
These factors are important because they can affect your ability to grow your wealth. Trading costs can significantly change your potential profit from a trade. A bad trading platform can make trades more complicated and time-consuming than necessary. An undesirable investment selection can limit your ability to reach your goals.
If you have issues with customer service or security, you won’t be able to trust your broker and will likely be unable to reach your goals as a result. ETF trading costs can vary greatly. Some brokers charge as little as $1 per trade while others can cost as much as $10 per trade. You should always look at the cost of trading ETFs before investing with a broker. You should also consider the other fees that a broker charges. You want to choose the broker that gives you the best combination of low costs and high quality.
Here is a step-by-step overview of choosing the best ETF broker for your needs:
Determine the type of brokerage account you need. What are your investment goals? For example, investing in a traditional brokerage account is the best option if you want to save for a rainy day or achieve a near-term goal without locking your money up until retirement.
Compare the costs of trading. Investing in ETFs requires reviewing the full pricing schedule of each online brokerage firm.
Take into account the services and conveniences that are available. It isn't all about price, especially for new investors. In addition to finding the lowest price, other factors you need to consider when picking a broker include research access, foreign trading, and fractional shares.
Select a brokerage firm. You've researched the costs, fees, and conveniences offered by various firms. Considering your investment objectives, you should weigh the pros and cons of each broker.
How Do ETFs Work?
An ETF is a type of fund that holds a collection of stocks. It holds these stocks in order to track the performance of an index. An ETF can track any type of index – from commodities to real estate to stocks. It can also track different types of indexes – for example, it can track a commodity index as well as an equity index.
The ETF manager chooses the stocks that the ETF will hold based on the performance of the index. This gives the ETF a way to track the performance of an index, but it comes with certain disadvantages. For example, the ETF won’t perform exactly the same as the index it tracks. It can also have different risk levels from the index.
👍 Pros of investing in ETFs
•You can invest small amounts of money.
•ETFs are extremely flexible and easy to trade.
•ETFs are generally considered safe investments. ETFs are low-cost.
•ETFs offer high liquidity.
👎 Cons of investing in ETFs
•ETFs don’t provide any control over your portfolio.
•There’s no guarantee your ETF will meet its performance objectives.
•An ETF may not be liquid when you need to sell.
•There is no assurance that an ETF will continue to exist.
What Is Minimum Deposit To Buy ETFs?
ETFs do not typically come with minimum investment requirements beyond the cost of a share and any fees or commissions associated with its purchase. This is an advantage over mutual funds which often have investment minimums of a few thousand dollars.
Remember, though, that an account minimum is different from an investment minimum. An account minimum is an amount you would need to deposit into the brokerage account just to open it. An investment minimum might be found in an index fund, in which you would have to buy, say, $1,000 in shares to take part in the fund.
Do ETFs Pay Dividends?
Whenever an ETF receives dividends for shares held in the fund, it must pay their investors. ETF shares may be paid in cash or in additional shares.
Hence, ETFs pay dividends if any of the stocks it owns pay dividends. A shareholder dividend is collected by the fund, and it is then paid to investors in the fund, usually quarterly, as dividends are paid by the companies that issued the stocks. ETF shares or cash may be used as payment.
If you’re looking to purchase an ETF that pays dividends, you should make sure it’s appropriate for your investment goals.
How to Invest in ETFs
To trade ETFs, you’ll need an account with an online broker. If you don’t have one, you can open one with one of the companies listed above in about 15 minutes — the whole process can typically be done online.
Choose an ETF broker and open an account. You’ll need to provide your personal information, an email address, and a password. The next step is to deposit or transfer funds into the account.
There are some brokers who require you to verify a transaction. In that case, your broker will deposit a small amount into your bank account - typically a few cents. You will need to inform the brokerage of the exact amount deposited after you confirm the transaction.
The process of purchasing ETFs is similar to buying stocks once you've funded the account. The type of account you choose may depend on your needs. The downside of margin trading is that you must borrow money from the broker and pay interest on that loan. For starters, you should stick with a cash account.
After getting your account set up and funded, you might be wondering which low-cost ETFs to invest in. You can purchase ETFs that allow you to pursue numerous different investment strategies. A passive strategy involves investing in low-fee ETFs that track an index like the S&P 500. It has been shown that passive strategies, on average, have outperformed active management, a strategy in which portfolio managers identify companies, sectors, or geographies they think will outperform market indexes. There have been instances where active managers have outperformed passive benchmarks over the long term.
To get started trading, enter the ETF's ticker, the order type, and the number of shares you wish to buy on your broker's website or online trading platform.
Is ETF Investing Safe?
The majority of ETFs are index funds, so they are generally safe. ETFs that track an index, such as the S&P 500, invest in the same securities as the index and attempt to match its returns every year. Even though all investments carry risk and indexed funds are subject to the full volatility of the market, the overall market trend is bullish. The ETFs that follow indexes will also gain value over time as the indexes gain value.
ETFs that track indexes only buy and sell stocks when their underlying indexes change. This eliminates the need for a fund manager to pick securities based on research, analysis, or intuition. Investors must spend a considerable amount of time researching the fund manager and return history when choosing mutual funds, for example. Indexed ETFs do not have this problem; investors can simply pick the index that they think will perform well over the next year.
Before you make a trade, you should consider whether ETF drawbacks outweigh their advantages. ETFs differ in several ways: Some are fee-based or do not have diversification because they follow a single asset class. Additionally, ETFs can drift from their benchmarks at any time. To determine whether an ETF fits your needs and understand its disadvantages, you can research it upfront.
A good rule of thumb is to make sure you’re comfortable with the level of risk inherent to the ETF you want to invest in. If you’re not comfortable with the level of risk, you may want to consider investing in a different ETF.
Methodology
We ranked the best ETF brokers based on four key criteria:
Trading costs
Platform and usability
Investment options
Customer service
We chose these four criteria because they are important for investors looking for a new way to grow their wealth. Trading costs can have a significant impact on your profits. A bad trading platform can make investing more complicated and less enjoyable. An undesirable investment selection can limit your ability to reach your goals. If you have issues with customer service or security, you won’t be able to trust your broker and might not be able to reach your goals as a result.
Summary
An ETF is a type of fund that tracks specific markets or indexes. It can be bought and sold like a stock, and it operates like an index fund. ETFs are considered safe investments and can be bought with a small amount of money. Before you jump into the world of ETF investing, it’s important to understand the pros and cons of this investment vehicle. Now that you know what an ETF is, how it works, and some of the pros and cons associated with investing in ETFs, it’s time to dive into specific ETFs and find the best ETF investments for you.
FAQ
What’s the difference between an ETF and a mutual fund?
These funds differ primarily in how they invest and how they are bought and sold. As we mentioned above, ETFs can be traded throughout the day, causing price fluctuations similar to those seen in individual stocks. A mutual fund is typically purchased from a fund company rather than from another investor, and it is priced after the market closes each day. While ETFs may be actively managed, most track an index passively. There are many mutual funds that are actively managed by professionals, resulting in higher fees.
What’s the difference between an ETF and stock?
Exchange-traded funds are traded on exchanges like the New York Stock Exchange, hence their name (exchange-traded funds). ETFs, unlike stocks, track indices, baskets of securities, bonds, or other assets, instead of individual companies.
Do ETFs pay dividends?
Yes. Buying ETFs that only hold dividend-paying stocks is possible (you can actually buy ETFs that own only dividend-paying stocks). Depending on the ETF, they are paid every month or at other intervals.
Can you reinvest ETF dividends?
Yes. Dividends can be reinvested in the same ETF, but there may be commissions.
Glossary for novice traders
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CFD
CFD is a contract between an investor/trader and seller that demonstrates that the trader will need to pay the price difference between the current value of the asset and its value at the time of contract to the seller.
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Options trading
Options trading is a financial derivative strategy that involves the buying and selling of options contracts, which give traders the right (but not the obligation) to buy or sell an underlying asset at a specified price, known as the strike price, before or on a predetermined expiration date. There are two main types of options: call options, which allow the holder to buy the underlying asset, and put options, which allow the holder to sell the underlying asset.
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3
Scalping
Scalping in trading is a strategy where traders aim to make quick, small profits by executing numerous short-term trades within seconds or minutes, capitalizing on minor price fluctuations.
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Volatility
Volatility refers to the degree of variation or fluctuation in the price or value of a financial asset, such as stocks, bonds, or cryptocurrencies, over a period of time. Higher volatility indicates that an asset's price is experiencing more significant and rapid price swings, while lower volatility suggests relatively stable and gradual price movements.
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Brokerage fee
A brokerage fee, also known as a commission, is a fee charged by a brokerage or financial institution for facilitating and executing financial transactions on behalf of clients. Brokerage fees are typically associated with services related to buying or selling assets such as stocks, bonds, commodities, or mutual funds.
Team that worked on the article
Oleg Tkachenko is an economic analyst and risk manager having more than 14 years of experience in working with systemically important banks, investment companies, and analytical platforms. He has been a Traders Union analyst since 2018. His primary specialties are analysis and prediction of price tendencies in the Forex, stock, commodity, and cryptocurrency markets, as well as the development of trading strategies and individual risk management systems. He also analyzes nonstandard investing markets and studies trading psychology.
Olga Shendetskaya has been a part of the Traders Union team as an author, editor and proofreader since 2017. Since 2020, Shendetskaya has been the assistant chief editor of the website of Traders Union, an international association of traders. She has over 10 years of experience of working with economic and financial texts. In the period of 2017-2020, Olga has worked as a journalist and editor of laftNews news agency, economic and financial news sections. At the moment, Olga is a part of the team of top industry experts involved in creation of educational articles in finance and investment, overseeing their writing and publication on the Traders Union website.