Can I buy/sell mutual funds on TD Ameritrade? Cost of investing in bonds, international, target retirement, NTF, No Load, small/medium/large cap stocks funds.


Overview of Mutual Funds at TD Ameritrade

Mutual Funds are pooled investment vehicles that make diversified investing more cost-effective and simple for the everyday investor. There are many thousands of mutual funds out there to choose from that cover a variety of investing styles, strategies, and fee structures – ranging from passive, index-tracking mutual funds with low expense ratios to higher fee, active mutual funds that focus on value or growth stocks. As you will discover in reading this article, TD Ameritrade offers its investors access to more than 12,000 different mutual funds from hundreds of fund families that cover a wide range of investment strategies.


Fund Families Offered on TD Ameritrade

TD Ameritrade offers mutual funds from hundreds of different fund families. Using their mutual fund screener tool and sorting by total net assets, you can see that these include some of the very well-known brands like Vanguard, Fidelity, PIMCO, and American Funds. The largest funds they offer tend to be broader in scope, such as Vanguard’s Total Stock Market Index Admiral Fund, which invests its $726billion in assets in stocks that are representative of the entire investable U.S. stock market.


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Other popular mutual fund offerings among these brands have more specific investment styles, such as Fidelity’s Contrafund® Fund, which uses fundamental factors such as financial condition and industry position to find attractive domestic and foreign stocks that the portfolio management team believes offer value that’s not being fully recognized by the market. Although much smaller than Vanguard’s Total Stock Market Fund, Fidelity’s Contrafund still manages a whopping $120billion.


Mutual Fund Fees at TD Ameritrade

Mutual Funds supported by TD Ameritrade are offered with different types of fee structures. Some mutual funds on TD Ameritrade include a load fee (which we’ll describe next), and for the ones that don’t have a load fee there is generally a flat commission for each trade.


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Load vs. No Load Mutual Funds

Some mutual funds charge what’s called a load fee, which is basically a sales commission (usually 3-6%) that the investor pays to an intermediary or broker when buying or selling shares in a mutual fund to compensate them for their efforts in marketing and offering the product. Load fees are determined by the mutual fund company but are collected by the intermediaries that offer the funds, such as Ameritrade in this case. Load fees can be described as front-end or initial, which means the investor pays the fee when they purchase the mutual fund or back-end or deferred, which means the fee is paid when the investor sells their shares.


No Transaction Fee Mutual Funds (NTF) at TD Ameritrade

For most of the mutual funds that don’t have load fees, TD Ameritrade charges a fixed commission of $49.99 per trade. They do, however, offer commission-free trading for hundreds of mutual funds which are denoted by “NTF”, meaning “no transaction fee”, on their mutual fund screener tool (below). But be aware that if you sell any of these “NTF” mutual funds within 180 days of your last purchase date, TD Ameritrade will charge you a $49.99 short-term trading fee.


Ameritrade Mutual Funds


TD Ameritrade Funds Expense Ratios

It’s important to remember that regardless of the type of commission or load fee that you are charged for purchasing a mutual fund, all mutual funds charge a management fee or expense ratio that can range from just 0.10% to sometimes more than 1%. This fee is taken out of the mutual fund’s NAV and is therefore easy for some investors to forget about when they consider the costs of mutual fund investing.


TD Ameritrade Mutual Funds Summary

To summarize, if you are interested in mutual fund investing, TD Ameritrade is a great place to open an account because they have such a comprehensive offering of mutual funds from hundreds of well-known and lesser known managers. One of the keys to selecting a good mutual fund is to have a good understanding of the various fees and commissions each one charges and to take that into account when considering the overall value that a portfolio manager brings to the table.


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