Robinhood does not offer mutual funds

Robinhood does not let you buy mutual funds through its platform. The app and website support individual stocks, exchange-traded funds (ETFs), options, and cryptocurrencies, but traditional mutual funds are not available.

This is a deliberate choice by Robinhood's design. The platform was built around commission-free trading of individual securities and ETFs, which are easier to buy and sell in small quantities. Mutual funds typically require larger minimum investments and are structured differently — they are managed pools of money rather than individual tradeable securities.

If you want to own mutual funds, you will need to use a different brokerage. Most traditional brokers — Fidelity, Vanguard, Charles Schwab, E-Trade — offer mutual funds alongside stocks and ETFs. Some of these brokers also offer commission-free trading on their own mutual funds.

Key Takeaways

  • Robinhood's platform does not support mutual fund purchases of any kind.
  • You can buy ETFs on Robinhood, which are similar to mutual funds but trade like stocks and often have lower fees.
  • If you want mutual funds specifically, you will need to open an account at a different brokerage such as Fidelity, Vanguard, or Charles Schwab.
  • Many traditional brokers now offer commission-free trading on mutual funds, removing a cost barrier that once made them expensive for small investors.

ETFs as an alternative to mutual funds on Robinhood

If you are interested in the diversification that mutual funds provide but want to stay on Robinhood, exchange-traded funds (ETFs) are a direct substitute. ETFs hold a basket of stocks or bonds just like mutual funds do, but they trade on an exchange like individual stocks.

Robinhood lets you buy ETFs with no commission and no minimum investment. You can buy a single share of an ETF that tracks the S&P 500, the total stock market, or any other index or theme. Many investors find ETFs preferable to mutual funds because they are cheaper to hold (lower expense ratios), more tax-efficient, and you can sell them instantly during market hours.

Popular ETFs available on Robinhood include VOO and SPY (both track the S&P 500), VTI (total U.S. stock market), and QQQ (Nasdaq 100). You can search for any ETF by its ticker symbol in the Robinhood app and buy fractional shares if you do not have enough cash for a full share.

Why Robinhood does not carry mutual funds

Mutual funds are structured as open-end investment companies that issue new shares and redeem old ones directly with investors. This means they settle on a T+1 basis (one business day after purchase) and require fund companies to manage the flow of money in and out. Robinhood's infrastructure was built for real-time trading of securities that settle instantly or within standard market hours.

Additionally, mutual funds typically have higher expense ratios than ETFs, and many require minimum investments of $1,000 to $3,000. Robinhood's business model emphasizes low barriers to entry and fractional shares, which does not align well with how mutual funds operate. The company chose to focus on ETFs instead, which offer similar diversification with lower costs and more flexibility.

How to buy mutual funds elsewhere

If you want to own mutual funds, you can open an account at any major brokerage. Fidelity, Vanguard, and Charles Schwab all offer thousands of mutual funds, including their own proprietary funds and those from other companies. Many of these brokers now charge no commission on mutual fund purchases.

The process is straightforward: open an account, link a bank account or transfer money in, search for the mutual fund by name or ticker, and place an order. The fund will settle the next business day. You can hold mutual funds in a regular taxable brokerage account, an IRA, a 401(k), or other retirement accounts depending on the brokerage.

Some investors use multiple brokerages — Robinhood for ETFs and individual stocks, and another platform for mutual funds. This is common and legal, though it means tracking accounts in more than one place.

Comparing costs: mutual funds versus ETFs on Robinhood

The main cost difference between mutual funds and ETFs is the expense ratio — the annual fee charged by the fund manager. A typical mutual fund expense ratio ranges from 0.5% to 1% per year, though some are higher. ETFs often charge 0.03% to 0.20% per year for index-tracking funds.

On Robinhood, you pay no commission to buy or sell ETFs, and you can buy fractional shares with any amount of money. With mutual funds at other brokerages, you may pay no commission either, but you typically need a larger minimum investment to start. Over time, the lower expense ratios of ETFs can add up to meaningful savings, especially for long-term investors.

If you are comparing a low-cost mutual fund (0.1% expense ratio) to a similar ETF (0.05% expense ratio), the difference is small. But if you are comparing a higher-cost mutual fund (1% expense ratio) to an ETF (0.1% expense ratio), you could save 0.9% per year — which compounds significantly over decades.

What you can buy on Robinhood instead

Robinhood's investment options include individual stocks, ETFs, options contracts, and cryptocurrencies. For investors seeking diversification without picking individual stocks, ETFs are the closest match to mutual funds. You can also build a diversified portfolio by buying multiple individual stocks, though this requires more research and active management.

Options trading on Robinhood requires approval and carries higher risk. Cryptocurrencies like Bitcoin and Ethereum are available but are volatile and speculative. For most investors focused on long-term wealth building, ETFs remain the most practical choice on Robinhood.

Frequently Asked Questions

Can I transfer mutual funds I own elsewhere into Robinhood?

No. Robinhood does not accept mutual fund transfers, and you cannot hold mutual funds in a Robinhood account. If you own mutual funds at another brokerage and want to move to Robinhood, you would need to sell them (which may trigger capital gains taxes) and reinvest the proceeds in ETFs or stocks on Robinhood.

Are ETFs the same thing as mutual funds?

ETFs and mutual funds are similar in that both hold a basket of securities and offer diversification. The key differences are that ETFs trade like stocks (you can buy and sell during market hours), typically have lower fees, and are more tax-efficient. Mutual funds settle the next business day and often require larger minimum investments.

Do I need a minimum amount of money to buy ETFs on Robinhood?

No. Robinhood lets you buy fractional shares of any ETF, so you can start with any amount of money — even $1. You do not need to wait until you have enough for a full share, which makes ETFs accessible to new investors.

What if I want to own a specific mutual fund that is not available as an ETF?

You will need to open an account at a brokerage that carries that mutual fund. Most large brokerages offer thousands of mutual funds from many different fund companies. You can keep both a Robinhood account and an account elsewhere if you want to hold both ETFs and specific mutual funds.