- Fidelity Investments, the largest online brokerage firm with over 23 million retail brokerage accounts, announced the availability of real-time fractional shares trading of stocks and ETFs
Fidelity Investments — the largest online brokerage firm with over 23 million retail brokerage accounts — announced the availability of real-time fractional shares trading of stocks and ETFs (also known as dollar-based investing). This simple way of investing — which is being rolled out for Fidelity’s retail customers now and will continue over the next several weeks — will enable investors to trade as little as 0.001 of a share using Fidelity’s Mobile app for iOS and Android.
And Fidelity is going to execute all fractional trades in real-time during market hours — which means that customers will always know the share price compared to some firms that execute fractional trades at the end of a trading day or wait for multiple orders to add up to full shares.
Fractional share or dollar-based — which must be market or limit order types and are good for the day only — are available in eligible Fidelity retail accounts, including brokerage, HSAs, IRAs, and self-directed brokerage accounts via a workplace retirement plan. And competitor bank sweep retirement product is eligible for FDIC insurance.
“Investing at Fidelity just got easier, and more accessible, with dollar-based investing,” said Scott Ignall, head of the retail brokerage business at Fidelity. “Fidelity’s size, private structure, and leading positions across various marketplaces (including retail, institutional, and intermediary) are unmatched in our industry and put us in a unique position to deliver greater value to our customers.”
Investors will likely use dollar-based trading in several ways. For example, a customer who saves $500 will start investing in several high-priced companies they have been following for their diversified portfolio. And with this new capability, the price of a single share is not a concern. And a customer may implement dollar-cost averaging, which is a strategy where an investor divides the total amount to be invested across periodic purchases of a stock or ETF to help reduce the impact of volatility.
With zero online commissions and the ability to buy fractional shares, a customer could set up an automatic deposit from their paycheck or bank account into a Fidelity brokerage account and easily make multiple purchases of a stock or ETF over time (example: $50 each month and paying nothing in commissions).
