Robinhood offers index funds, but only through fractional shares of ETFs, not mutual funds

Robinhood does not sell traditional mutual fund index funds. Instead, you can build an index fund portfolio by buying fractional shares of exchange-traded funds (ETFs) that track indexes. ETFs are similar to index mutual funds — they hold a basket of stocks or bonds designed to match a market index — but they trade like stocks during market hours and often have lower fees.

The platform lets you buy as little as one cent worth of an ETF, so you do not need thousands of dollars to start. You can search for index ETFs by their ticker symbol (for example, VOO for the S&P 500 or VTI for the total U.S. stock market) and purchase fractional shares just as you would a single stock.

Key Takeaways

  • Robinhood offers index ETFs from providers like Vanguard, iShares, and Schwab, but does not offer index mutual funds.
  • You can buy fractional shares of index ETFs starting at one cent, with no minimum investment amount.
  • Index ETFs on Robinhood typically have expense ratios between 0.03% and 0.20% per year, depending on the fund.
  • Robinhood charges no commission on ETF trades, but you pay the bid-ask spread (the difference between the buy and sell price at that moment).

Popular index ETFs available on Robinhood

Robinhood carries hundreds of ETFs, including the most common index funds from major providers. The S&P 500 index can be tracked through VOO (Vanguard), IVV (iShares), or SPLG (SPDR). The total U.S. stock market index is available as VTI (Vanguard), ITOT (iShares), or SCHB (Schwab). International stock indexes include VXUS (Vanguard total international) and IEFA (iShares core MSCI EAFE).

Bond index ETFs are also available. BND (Vanguard total bond market) and AGG (iShares core U.S. aggregate bond) track the broad bond market. You can search any of these tickers directly in the Robinhood app to see the current price, expense ratio, and holdings.

The specific ETFs available can change, and Robinhood occasionally adds or removes funds. Check the app to confirm a fund is currently tradeable before you decide to invest.

How costs work when you buy index ETFs on Robinhood

Robinhood charges zero commission on ETF trades, which means you pay nothing to buy or sell. However, you do pay the bid-ask spread — the difference between what buyers are willing to pay and what sellers are asking. For popular index ETFs like VOO or VTI, this spread is usually very small (a few cents on a $100+ purchase), but it still costs you money at the moment of purchase.

You also pay an annual expense ratio, which is a percentage of your investment that the fund company charges each year to manage the fund. Most index ETFs have expense ratios between 0.03% and 0.20% per year. On a $1,000 investment in a fund with a 0.10% expense ratio, you would pay $1 per year. This fee is deducted automatically and does not appear as a separate charge.

Robinhood does not charge account fees, custodial fees, or inactivity fees for holding ETFs.

Differences between ETFs and mutual funds on Robinhood

Robinhood does not offer index mutual funds at all. Mutual funds are priced once per day after the market closes, while ETFs trade throughout the day like stocks. This means you can see the price of an ETF change in real time and buy or sell at any moment the market is open. Mutual funds require you to place an order during the trading day, but the price you pay is set at the end of that day.

Mutual funds often have higher minimum investments (sometimes $1,000 or more to start), while Robinhood's fractional share feature lets you invest any amount. Mutual funds also typically have higher expense ratios than comparable index ETFs, though this varies by provider and fund type.

If you want index fund exposure on Robinhood, ETFs are your only option. Many investors find this sufficient because the largest index ETFs are liquid, low-cost, and widely available.

How to find and buy an index ETF on Robinhood

Open the Robinhood app and tap the search icon at the bottom. Type the ticker symbol of the index ETF you want — for example, VOO for the Vanguard S&P 500 ETF. The fund will appear in the results. Tap it to see the fund's price, expense ratio, holdings, and performance chart.

Tap the "Buy" button. Enter the dollar amount you want to invest (you can enter any amount, even $1). Robinhood will calculate how many fractional shares that buys at the current price. Review the order and tap "Confirm" to complete the purchase. The shares settle in your account immediately during market hours, though the transaction may take one to two business days to fully clear.

You can set up automatic recurring investments if you want to buy the same ETF on a regular schedule. This is sometimes called a "recurring investment" or "automatic purchase" feature.

Tax considerations when holding index ETFs on Robinhood

Index ETFs are generally tax-efficient because they trade less frequently than actively managed funds, which means fewer taxable capital gains distributions. However, when you sell an ETF at a profit, you owe capital gains tax on that profit. If you hold the ETF for more than one year before selling, you pay long-term capital gains tax, which is usually lower than short-term rates.

Robinhood provides a tax document (Form 1099) at the end of the year that reports your gains and losses. You will need this document to file your taxes. If you hold index ETFs in a retirement account like an IRA or 401(k), the tax rules are different — gains inside those accounts are not taxed until you withdraw the money.

Frequently Asked Questions

Can I set up automatic monthly investments in an index ETF on Robinhood?

Yes. Robinhood offers a recurring investment feature that lets you set up automatic purchases of the same ETF on a schedule you choose (weekly, monthly, or another interval). You set a dollar amount, and Robinhood buys fractional shares at the market price on the day of purchase. You can pause or cancel the recurring investment at any time.

What is the difference between VOO, IVV, and SPLG if they all track the S&P 500?

All three track the same index, so their holdings and performance are nearly identical. The main differences are the fund provider (Vanguard, iShares, and SPDR respectively) and the expense ratio — VOO is 0.03%, IVV is 0.03%, and SPLG is 0.03%. For most investors, the choice between them does not matter much. Pick one and stick with it.

Do I pay taxes on index ETF dividends while I hold them on Robinhood?

Yes. Index ETFs pay dividends (usually quarterly), and you owe tax on those dividends in the year you receive them, even if you do not sell the ETF. Robinhood will report these dividends on your tax form. If the ETF is in a tax-advantaged account like an IRA, you do not owe tax on the dividends until you withdraw money from the account.

Can I buy index funds through Robinhood's retirement accounts?

Yes. Robinhood offers IRAs (both traditional and Roth), and you can buy index ETFs inside them using the same process as a regular brokerage account. The tax treatment is different — gains and dividends are not taxed while the money is in the IRA.