Top 10 Best Brokers for ETFs 2023

In this article, we have grouped the best brokers for investing in ETFs.

To compile this ranking, we took into consideration the following factors:

• Total number of ETFs to invest in
• Presence of fractional ETFs
• Low commissions on ETFs
• Ability to invest in leverage
• Additional tools for managing ETFs

Round-up

WARNING

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
Between 74-89% of retail investor accounts lose money when trading CFDs.
You should consider whether you can afford to take the high risk of losing your money

Review

1. DEGIRO

• DEGIRO is a broker offering ETFs only in the European territory.
• With DEGIRO you can trade more than 4,000 ETFs with fees as low as $1.
• DEGIRO offers a selection of ETFs called Core Selection that allows you to invest in ETFs without commissions.
• DEGIRO does not offer leverage on ETFs.
• Minimum deposit to open a real account starts at €0.01, and no trial account is available.

Visit DEGIRO
(Investing involves risk of loss)

2. eToro

• eToro offers more than 100 ETFs to invest in as CFDs.
• eToro allows you to invest in fractional CFDs starting as low as $10.
• Within eToro you can also find Smart Portfolios, which are ETF-like assets that allow you to invest in different markets.
• The minimum deposit to open an account at eToro starts at $10 but varies depending on where the trader lives.
• With eToro you can open a totally free demo account to invest in ETFs with virtual money.

Visit eToro
(79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money)

3. Admirals

• With Admirals you can trade over 380 ETFs as CFDs.
• On Admirals you can invest in fractional ETFs as low as $1.
• The leverage on Admirals’ CFD ETFs is 1:5.
• Commissions on Admirals ETFs are variable depending on market conditions.
• A minimum deposit of $100 is required to open an account with Admirals.

Visit Admirals
(76% of retail CFD accounts lose money)

4. Trading 212

• With Trading 212 you can invest in real ETFs and CFD ETFs.
• At Trading 212 you can trade over 400 ETFs in total with low commissions.
• ETFs on Trading 212 can be traded as fractional as low as $1.
• Opening an account at Trading 212 requires a minimum deposit of $1, which extends to $10 for a CFD account.

Visit Trading 212
(76% of retail CFD accounts lose money)

5. Interactive Brokers

• It is possible to invest in more than 1,000 ETFs.
• Among them Interactive Brokers offers commission-free ETFs on both Lite and Pro accounts.
• IB’s platform is highly customizable, and is suitable for implementing automated trading robots.
• Interactive Brokers requires a minimum deposit of at least $2,000; however, a demo account is available to try out the service.

Visit Interactive Brokers
(74-89% of retail CFD accounts lose money)

6. CMC Markets

• CMC Markets offers ETFs on CFDs.
• More than 1,000 ETFs can be found on CMC’s platform.
• With a CMC account you can get access to quantitative equity analysis from Morningstar.
• Slippage on ETFs with CMC is minimal thanks to lightning-fast order execution as low as 7.5ms.

Visit CMC Markets
(78% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider.)

7. XTB

• More than 300 ETFs can be traded on a variety of markets with XTB.
• ETFs on XTB are commission-free until a monthly volume of US$100,000 is reached.
• Above the maximum volume, ETFs will charge a 0.2% commission with a minimum commission starting at $10.
• XTB offers fractional ETFs starting at $10.

Visit XTB
(79% of retail CFD accounts lose money)

8. AvaTrade

• AvaTrade is a broker market maker that offers ETF trading in CFDs.
• At AvaTrade you can trade over 50 ETFs at fixed spreads.
• To open an account at AvaTrade, a minimum of $100 is required. Alternatively, a free demo account is available to try out the service.

Visit AvaTrade
(79% of retail CFD accounts lose money)

9. Saxo Bank

• Through Saxo Bank you can trade over 4,000 ETFs in a professional environment.
• Commissions start at $18 per order, but can be reduced to $2.50 for more active traders.
• Opening an account at Saxo Bank requires a minimum deposit of $500 that varies depending on the trader’s country of residence.

Visit Saxo Bank
(72% of retail CFD accounts lose money)

10. Fineco

• Fineco offers its traders the ability to trade more than 100 ETFs.
• Commissions on Fineco ETFs start at €2.95 per order, but increase for less active traders to €19 per transaction.
• When ETFs are traded as CFDs, Fineco charges a variable spread.
• ETFs can be purchased either as CFDs or as Reals.
• Fineco requires a minimum deposit of $100 to open a real account.

Visit Fineco
(74-89% retail investor accounts lose money)

Characteristics of ETFs: how to choose one

There are several companies in the world that create ETFs, and it is common to find ETFs that replicate the same markets, but in a slightly different way.

The factors governing the choice of an ETF are varied, but among the main ones are:

• The price
• The size of the fund
• The annual costs
• The type of replication
• The strategy used
• The currency of the fund
• The mode of dividend distribution
• The exchange at which the ETF is listed

ETFs are listed on an exchange, and just like stocks they have a market value. Their value is derived primarily from the performance of the market that the ETF is replicating. Typically, the cost of an ETF ranges from $5 to $200. In addition, you have to consider the commissions of the broker on which you buy the ETF.

In addition to the initial cost to invest in it, each ETF has:

• an annual cost (the TER, or Total Expense Ratio), which is generally less than 1% per year and is used to cover the costs of managing the fund
• commissions that the distributing entity must pay to brokers each time it recalibrates the basket of assets within the ETF
• swap fees if the type of ETF replication is synthetic.

ETF replication can be physical or synthetic. Typically, larger funds have the economics to actually buy the assets within the ETF, while smaller funds may not, and consequently invest in derivatives.

Another case where an ETF might offer synthetic replications is when it seeks to replicate markets where it is complex or inexpensive to source physical assets (e.g., stocks listed on exchanges in poor and/or emerging markets).

Depending on the size of the fund, is important not only to have a physical replication, but also to have a more faithful sampling of the market you want to track. In fact, a large ETF will be able to source a large number of assets that will allow it to more accurately manage allocation percentages, and thus, better replicate the market.

Each ETF has its own investment strategy. Typically ETFs use long-only strategies (i.e., they buy assets with the expectation that they will increase in value), however, there are ETFs that use short-only strategies (which increase in value if the market loses it), ETFs that use leverage, or ETFs that use all three strategies.

Another important point is the currency of the fund. Investing in euros in a fund that uses the U.S. dollar exposes the investor to foreign exchange risk.

Finally, it is also important to know the dividend management of ETFs. Distributing ETFs “distribute” dividends directly to the investor’s account. In contrast, accumulation ETFs reinvest dividends within the fund.

How much money can you earn with ETFs?

Taking a look at the top 20 ETFs by market capitalization in 2022, to date 10-year average returns come in at 15.6%, while one-year returns are generally negative with an average of -14.68%.

Why invest in ETFs: Risks and benefits

Pro

Investing in ETFs has many benefits on a practical level. In fact, they are professionally managed investment funds, and the trader’s only responsibility is to choose the correct ETF to invest in without worrying about rebalancing to achieve a perfect replication.

ETFs are also a much cheaper method of investing in stock indexes, which often require large sums (even exceeding $1,000 per single share).

Brokers who offer ETFs typically charge very low commissions (and even zero in some cases).

Cons

However, although ETFs have many benefits, there are also two risks namely. These are, foreign exchange risk and market fluctuations.

When you invest in EUR in a USD-listed ETF, in addition to the ETF you are also indirectly investing in the U.S. dollar. Assuming that the Euro becomes stronger than the U.S. Dollar, the ETF will lose value relative to the initial investment.

Finally, another problem with ETFs is the risk from market fluctuations. Although it is often considered a less risky asset than others, there is always the risk that it will lose value and thus cause the investor to lose money.

How long can an ETF be held?

An analysis of the returns of the world’s leading ETFs shows that on average it takes at least 3 years to make a profit from the investment. However, the longer an ETF is held, the more its average returns increase.

That is why when investing in an ETF there is no maximum time limit, but it always depends on the investor’s plans and the average returns of the ETF they are investing in.

You also have to take into account the type of ETF you are investing in.

Investing in synthetic ETFs, that is, ETFs that have derivatives as their underlying assets could be counterproductive in the long run because the swap fees would add up day after day, thus reducing some of the ETF’s growth.

If you are looking for an ETF to hold for the long term you should consider physically replicating ETFs.

How much money does it take to invest in ETFs?

It takes an average of $175 to invest in an ETF, taking into consideration the top 20 ETFs by market capitalization.

However, each ETF has its own cost, which means that ETFs of all values can be found.

Their market valuation also depends on the exchange on which they are listed. The same ETF listed on two different exchanges may have two slightly different valuations.

To invest in the most expensive ETFs, it is good to know that there are brokers such as Trading212 that allow ETFs to be fractionated as low as $1.