Best brokers for funds for Europeans

To help you to find the best online broker for funds in 2021, we went ahead and did the research for you. First, we selected 91 quality online brokers, then we tested them with real accounts. We evaluated their selection of mutual funds, the fees they charge and much more. We took their non-trading fees, such as the inactivity fee, into special consideration. We dug deep, so you won’t have to. 5 made it to the top in Europe. We highly recommend all 5 to you. And now, without further ado...

Our top 5 picks for the best online brokers for funds in Europe:

1. Swissquote is the best broker for funds for Europeans in 2021. Access to many markets and products. No inactivity fee. Rock-solid background.
2. Firstrade takes second place. Free stock, ETF, fund and options trading. Solid research tools. Quality educational tools.
3. LYNX rounds out the top three. Wide range of markets and products. Low stock and ETF trading fees. Great mobile platform.
4. flatex, numero quattro. Low stock, ETF, fund and bond fees. Strong company background. Great educational tools.
5. DEGIRO just made it to the list at number five. One of the lowest fees on the market. Regulated by multiple top-tier authorities. Easy-to-use web and mobile platform.

All 5 brokers are considered safe, as they are regulated by at least one top-tier financial authortiy.

What makes a good online broker for mutual fund investing? First, they need to offer fair fees for buying and selling funds. Second, they should also offer access to a good selection of fund providers. It's also important that the inactivity fee shouldn't be high and we considered the broker's overall score as well.

These features may sound obvious and easy to list, but they're hard to figure it out. We are testing brokers based on more than 300 criteria with real accounts and real money. We know what's up.

For a tailored recommendation, check out our broker finder tool. You can enter your country and it will show only the relevant brokers. Want more details? Compare brokers with the help of this detailed comparison table.

And now, let's see the best brokers for fund investors for Europeans one by one, starting with the winner, Swissquote.

Swissquote is a Swiss investment bank established in 1996. It has two main trading arms: a Swiss unit for trading stocks, funds, options and futures, and a company in the UK for CFDs and forex.

Formally, Swissquote Bank Ltd is based in Switzerland and is regulated by the Swiss Financial Market Supervisory Authority (FINMA), the country's financial regulator.

The other entity, Swissquote Ltd, is Luxembourg and offers CFDs and forex trading. It is regulated by the Commission de Surveillance du Secteur Financier (CSSF), Luxembourg's regulator. The purpose of this entity is to grant access to the European markets after Brexit. The UK entity remained only for UK clients

Swissquote is considered safe because Swissquote Bank Ltd has a banking license, it is listed on the Swiss stock exchange, discloses detailed financials regularly and has a long track record.

Here, we focus mainly on the Swiss entity, sometimes referred to as "Swissquote (CH)". Throughout our content, we will refer to the Luxembourg-based entity as "Swissquote Europe (LUX)".

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#1 Swissquote
Fees

Swissquote has low fees when it comes to buying and selling funds.

* Note: We excluded the following fees:

• Ongoing fees (expense ratio): All mutual funds have a fee called expense ratio, which is sometimes called a management fee (or "operating expense"). This fee is deducted daily and is determined by the fund provider itself, not by your broker. Annually, it usually comes to 0.10%-2.5%, depending on the fund. There might be different series or classes, which are identified by a letter. For example, a fund Series 'A' for retail investors may charge 0.5%-1% more than the same fund Series 'I', but the latter might have a minimum investment requirement of $200,000.
• Front-load and redemption fees: A front-load fee may be charged when you purchase the fund; while if you sell, a redemption fee may apply. Again, these fees depend on the mutual fund itself, as some providers might charge one or both. Usually this one-time fee is between 0 and 5%.
• Short term redemption fees: Some brokers might charge you if you sell your fund within 30/60/90/etc. days. In our review, we assumed a longer investment time horizon (6+ months).
• Performance fee: Some funds deduct a percentage for above-benchmark net returns, typically 10%-20%. For example, if they managed to beat the S&P 500 index by 2 percentage points in a given year, they would deduct 0.2% (that is if the performance fee was 10% and their benchmark was the S&P 500)

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#1 Swissquote
Markets and products

Available fund providers typically include many boutique firms, as well as some or all of the biggest fund providers (asset managers) such as Fidelity, Vanguard, Franklin Templeton, Morgan Stanley, JPMorgan or BlackRock. These have hundreds of funds, so you've probably heard of them already.

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Firstrade is a US discount stockbroker regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). The company was founded in 1985 under the name of First Flushing Securities.

Firstrade is considered safe because it has a long track record and is overseen by top-tier regulators.

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#2 Firstrade
Fees

Firstrade has low fees when it comes to buying and selling funds.

* Note: We excluded the following fees:

• Ongoing fees (expense ratio): All mutual funds have a fee called expense ratio, which is sometimes called a management fee (or "operating expense"). This fee is deducted daily and is determined by the fund provider itself, not by your broker. Annually, it usually comes to 0.10%-2.5%, depending on the fund. There might be different series or classes, which are identified by a letter. For example, a fund Series 'A' for retail investors may charge 0.5%-1% more than the same fund Series 'I', but the latter might have a minimum investment requirement of $200,000.
• Front-load and redemption fees: A front-load fee may be charged when you purchase the fund; while if you sell, a redemption fee may apply. Again, these fees depend on the mutual fund itself, as some providers might charge one or both. Usually this one-time fee is between 0 and 5%.
• Short term redemption fees: Some brokers might charge you if you sell your fund within 30/60/90/etc. days. In our review, we assumed a longer investment time horizon (6+ months).
• Performance fee: Some funds deduct a percentage for above-benchmark net returns, typically 10%-20%. For example, if they managed to beat the S&P 500 index by 2 percentage points in a given year, they would deduct 0.2% (that is if the performance fee was 10% and their benchmark was the S&P 500)

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#2 Firstrade
Markets and products

Available fund providers typically include many boutique firms, as well as some or all of the biggest fund providers (asset managers) such as Fidelity, Vanguard, Franklin Templeton, Morgan Stanley, JPMorgan or BlackRock. These have hundreds of funds, so you've probably heard of them already.

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LYNX is a Netherlands-based stockbroker founded in 2006.

LYNX is an introducing broker of Interactive Brokers (IB). In practice, this means that your deposited funds will be held by IB but fees are charged by LYNX. You can also use IB's trading platforms. 

LYNX is considered safe because both LYNX and Interactive Brokers are regulated by top-tier financial authorities.

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#3 LYNX
Fees

LYNX has low fees when it comes to buying and selling funds.

* Note: We excluded the following fees:

• Ongoing fees (expense ratio): All mutual funds have a fee called expense ratio, which is sometimes called a management fee (or "operating expense"). This fee is deducted daily and is determined by the fund provider itself, not by your broker. Annually, it usually comes to 0.10%-2.5%, depending on the fund. There might be different series or classes, which are identified by a letter. For example, a fund Series 'A' for retail investors may charge 0.5%-1% more than the same fund Series 'I', but the latter might have a minimum investment requirement of $200,000.
• Front-load and redemption fees: A front-load fee may be charged when you purchase the fund; while if you sell, a redemption fee may apply. Again, these fees depend on the mutual fund itself, as some providers might charge one or both. Usually this one-time fee is between 0 and 5%.
• Short term redemption fees: Some brokers might charge you if you sell your fund within 30/60/90/etc. days. In our review, we assumed a longer investment time horizon (6+ months).
• Performance fee: Some funds deduct a percentage for above-benchmark net returns, typically 10%-20%. For example, if they managed to beat the S&P 500 index by 2 percentage points in a given year, they would deduct 0.2% (that is if the performance fee was 10% and their benchmark was the S&P 500)

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#3 LYNX
Markets and products

Available fund providers typically include many boutique firms, as well as some or all of the biggest fund providers (asset managers) such as Fidelity, Vanguard, Franklin Templeton, Morgan Stanley, JPMorgan or BlackRock. These have hundreds of funds, so you've probably heard of them already.

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flatex is a Germany-based stockbroker, regulated by Germany's Federal Financial Supervisory Authority (BaFin). It was originally established as PRE.IPO AG in 1999 and received its banking and brokerage license in 2005, when the company was renamed flatex.

flatex is considered safe because it has a long track record, is listed on a stock exchange, has a banking background, discloses its financials and is regulated by a top-tier authority.

In 2019, flatex AG acquired 100% of DEGIRO. Currently they operate as separate entities, with flatex strengthening DEGIRO's regulatory backbone.

Being a German broker, all of flatex's trading services are available only in German.

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#4 flatex
Fees

flatex has low fees when it comes to buying and selling funds.

* Note: We excluded the following fees:

• Ongoing fees (expense ratio): All mutual funds have a fee called expense ratio, which is sometimes called a management fee (or "operating expense"). This fee is deducted daily and is determined by the fund provider itself, not by your broker. Annually, it usually comes to 0.10%-2.5%, depending on the fund. There might be different series or classes, which are identified by a letter. For example, a fund Series 'A' for retail investors may charge 0.5%-1% more than the same fund Series 'I', but the latter might have a minimum investment requirement of $200,000.
• Front-load and redemption fees: A front-load fee may be charged when you purchase the fund; while if you sell, a redemption fee may apply. Again, these fees depend on the mutual fund itself, as some providers might charge one or both. Usually this one-time fee is between 0 and 5%.
• Short term redemption fees: Some brokers might charge you if you sell your fund within 30/60/90/etc. days. In our review, we assumed a longer investment time horizon (6+ months).
• Performance fee: Some funds deduct a percentage for above-benchmark net returns, typically 10%-20%. For example, if they managed to beat the S&P 500 index by 2 percentage points in a given year, they would deduct 0.2% (that is if the performance fee was 10% and their benchmark was the S&P 500)

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#4 flatex
Markets and products

Available fund providers typically include many boutique firms, as well as some or all of the biggest fund providers (asset managers) such as Fidelity, Vanguard, Franklin Templeton, Morgan Stanley, JPMorgan or BlackRock. These have hundreds of funds, so you've probably heard of them already.

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DEGIRO is a German-Dutch online discount broker. It was established in 2008 by former employees of another brokerage company in the Netherlands. DEGIRO merged with flatexDEGIRO Bank AG in early 2021, creating the biggest online execution-only broker in Europe with its own banking license.

DEGIRO is regulated by top-tier financial authorities such as the BaFin in Germany.

Disclaimer: Investing involves risk of loss.

Disclaimer for UK clients: Deemed authorised and regulated by the Financial Conduct Authority. The nature and extent of consumer protections may differ from those for firms based in the UK. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.

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#5 DEGIRO
Fees

DEGIRO has average fees when it comes to buying and selling funds.

* Note: We excluded the following fees:

• Ongoing fees (expense ratio): All mutual funds have a fee called expense ratio, which is sometimes called a management fee (or "operating expense"). This fee is deducted daily and is determined by the fund provider itself, not by your broker. Annually, it usually comes to 0.10%-2.5%, depending on the fund. There might be different series or classes, which are identified by a letter. For example, a fund Series 'A' for retail investors may charge 0.5%-1% more than the same fund Series 'I', but the latter might have a minimum investment requirement of $200,000.
• Front-load and redemption fees: A front-load fee may be charged when you purchase the fund; while if you sell, a redemption fee may apply. Again, these fees depend on the mutual fund itself, as some providers might charge one or both. Usually this one-time fee is between 0 and 5%.
• Short term redemption fees: Some brokers might charge you if you sell your fund within 30/60/90/etc. days. In our review, we assumed a longer investment time horizon (6+ months).
• Performance fee: Some funds deduct a percentage for above-benchmark net returns, typically 10%-20%. For example, if they managed to beat the S&P 500 index by 2 percentage points in a given year, they would deduct 0.2% (that is if the performance fee was 10% and their benchmark was the S&P 500)

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#5 DEGIRO
Markets and products

Available fund providers typically include many boutique firms, as well as some or all of the biggest fund providers (asset managers) such as Fidelity, Vanguard, Franklin Templeton, Morgan Stanley, JPMorgan or BlackRock. These have hundreds of funds, so you've probably heard of them already.

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We tested brokers based on more than 300 criteria. Below, we will show you the 4 most important criteria we took into account when picking the best brokers for funds.

Are these brokers safe?

Mutual funds are typically meant for sizable buy-and-hold investments - so you certainly don't want to add extra risk by using the services of a less reputable broker. These brokers are all considered safe. You can be sure none of them is a scam. They are regulated by at least one top-tier financial authority. Some of them are also listed on an exchange, and some have a banking background.

Mutual funds are pooled investment vehicles managed by professional portfolio managers, who do the research, pick the assets to invest in, and monitor the fund's risk.

In Western Europe, they are sometimes referred to as SIVAC, which is the French name for open-ended mutual funds.

It is worth mentioning that there also exist some passively-managed funds, like Vanguard index funds, which track an index (similar to an ETF) and come at a very low cost. But in this article, we'll focus on open-ended, actively-managed mutual funds.

Open-ended means that there is no 'expiry'. Investors can buy and sell the fund each day, and if there are more buyers than sellers, the fund manager will use the proceeds to invest in line with the fund's strategy. For example, in a US Large Cap Tech Fund, the fund manager could use the new money to buy (additional) Apple or Facebook shares.

Actively-managed funds can also opt not to invest the money right away and park it instead in cash, for example when they want to wait for a better entry point to buy more stocks.

If investors collectively are sellers of the fund, the fund manager may sell shares to raise money to pay off these investors. Alternatively, the fund manager may simply use any cash previously set aside (as in the previous example) to pay investors who want to exit the fund.

Until ETFs became widespread, mutual funds were the only way to get exposure to a diversified portfolio without having to buy into 20-30 individual stocks or bonds.

Funds usually have a benchmark. For example, a US-focused large cap equity fund can be benchmarked against the S&P 500 index.

Do mutual funds still have any advantage over ETFs? The answer is, it depends. Unfortunately, there are a lot of 'closet index funds' that simply mimic the benchmark they are following. For example, they would simply buy S&P 500 components with almost the same weighting as the index. Obviously, such a strategy cannot produce any excess returns, and you just end up paying a higher fee compared with an ETF.

(To learn more about ETFs, be sure to check our article How to buy ETFs online?)

However, there are funds that are actively managed, and these do deviate from the index components, which can lead to over- or underperformance. (There are some actively-managed ETFs as well, but those are outside the scope of this article).

You'll find that most actively-managed funds that are benchmarked against major indexes like the S&P 500 usually underperform their benchmark in ‘good’ times (when the stock market rises), and therefore usually underperform in the long run as well. (You might want to read more about this in the following CNBC article: Active fund managers trail the S&P 500 for the ninth year in a row in triumph for indexing)

On the other hand, during bear markets and market downturns, mutual funds sometimes don't fall as much as indexes and ETFs, or have lower correlation with stock market movements.

To get an idea about how certain mutual funds have performed in the past, it is advisable to check their Morningstar ratings.

Some investors also put a lot of emphasis on the person who is managing the fund, although it's not guaranteed that 'star' managers will continue to outperform. However, it is often a good sign if the fund's manager has been the same person for a long time.

Most brokers have screeners for funds. Our advice is to put in the time and effort to find the fund that is suitable for your investment goals.

To wrap it up, ideally you'll want to find a mutual fund that

• Overperforms its benchmark, or
• Has (sometimes significantly) lower risk than the general stock or bond market, but with returns that are not that much lower, or
• Has low or inverse correlation with other investments you may have, and therefore can be a good instrument for portfolio diversification.

On the negative side, the ongoing fees of a fund can be a drag on performance.

Compared with stocks, mutual funds offer less flexibility. Mutual funds are priced once a day, so you would not know the price at which you purchased the funds until the end of the business day. Also, underperformance versus stock index benchmarks (and ETFs) is very common among mutual funds.

Note that there also exist so-called Closed-End Funds, or CEFs (not covered in this article). They are traded on stock exchanges like stocks, and can trade at a premium or discount compared with their Net Asset Value (NAV), depending on investors being optimistic or pessimistic on the fund's prospects. They are not open to new money; only existing shares are traded.

Open-ended funds accept new money and honor redemption requests once every day, and while there may be a bid-ask spread applied to Net Asset Value (NAV), generally any selling and buying will be based on the daily closing NAV. In this article, we cover open-ended funds.

You saw the details, now let's zoom out. Here are the best online brokers for mutual funds for Europeans:

Swissquote is our winner, the best online broker for funds for Europeans. Access to many markets and products. No inactivity fee. Rock-solid background.
All of these brokers are considered safe, and a great choice. Pick the winner or any runner-up, and take the next step in your investment journey. Let us know what you think in the comment section.
Still unsure? Use our broker finder tool to find the online broker most suitable for you.