In early 2025, E-Trade launched a series of five no-fee index mutual funds, making it the second major online brokerage to offer no-cost funds, following Fidelity Investments. That’s good news for investors at E-Trade, and the move puts even further pressure on the costs of mutual funds and ETFs, both of which have seen declining fees for decades.
But how do these new E-Trade index funds compare to what’s on offer at major rivals like Fidelity? Pretty well, it turns out.
Overview of E-Trade’s no-fee funds
E-Trade’s new lineup of mutual funds is a solid entry, though would-be investors should know a few things as they compare the index funds to their key rivals at Fidelity.
First, the mutual funds charge no management fees — that is, the expense ratio is zero for these funds. An expense ratio is a fee that fund companies charge as a percent of your investment in the fund. With these E-Trade funds, you’ll avoid these fees entirely.
E-Trade offers five no-fee mutual funds:
- E-Trade No Fee Large Cap Index Fund (ETLGX)
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This fund tracks the 500 largest companies in the U.S., making it effectively the same as an S&P 500 index fund, though it doesn’t call itself that in order to avoid the costs associated with that branding.
- E-Trade No Fee Total Market Index Fund (ETTOX)
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This fund tracks the 3,000 largest companies in the U.S. stock market, making it effectively the same as the Russell 3000 stock index.
- E-Trade No Fee International Index Fund (ETISX)
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This fund tracks major stocks in developed markets, excluding the U.S., giving investors exposure to global stocks.
- E-Trade No Fee Municipal Bond Index Fund (ETMUX)
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This fund invests in highly rated municipal bonds, which offer tax-free interest to investors.
- E-Trade No Fee U.S. Bond Index Fund (ETBOX)
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This fund tracks the Bloomberg U.S. Government Credit Bond Index, providing broad exposure to the bond market.
These funds are available only to E-Trade customers, just like Fidelity’s no-fee funds, so you can’t buy them at other brokers. In fact, if you buy them at E-Trade (or Fidelity) and you later decide to transfer your account, you can’t take the funds to another brokerage. So, these no-fee funds at E-Trade and Fidelity help encourage you to stay with that broker.
Overview of Fidelity’s no-fee funds
Fidelity was the first to offer fee-free index mutual funds starting back in 2018. Currently, the broker offers four of what it calls Fidelity ZERO funds:
- Fidelity ZERO Total Market Index Fund (FZROX)
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This fund offers broad exposure to the stock market.
- Fidelity ZERO International Index Fund (FZILX)
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This no-fee fund provides global stock exposure.
- Fidelity ZERO Extended Market Index Fund (FZIPX)
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This fund offers exposure to small- and mid-cap stocks.
So E-Trade and Fidelity offer a few similar funds, including an S&P 500 clone, an international stock fund and a total market stock fund. In contrast to one another, E-Trade offers a pair of bond funds, while Fidelity provides a fund with exposure to small- and medium-sized companies.
Compare with Schwab’s offering of low-cost funds
Where is brokerage Charles Schwab in all of this? So far, only E-Trade and Fidelity offer no-fee index mutual funds, though Schwab does have plenty of low-cost funds.
For example, the Schwab S&P 500 Index Fund (SWPPX) ranks among the best S&P 500 index funds and still charges a ridiculously low 0.02 percent expense ratio. In real terms, that means an investor would pay $2 per year for every $10,000 invested in the fund. So, that cheap fund still puts Schwab among the top low-cost index funds, just not at the rock-bottom price of free.
Mutual fund fees continue to plummet
The advent of fee-free funds from E-Trade and Fidelity is welcome news for investors, allowing them to invest in a diversified fund at no net cost. The funds are the next logical step for mutual fund fees, which have been falling for decades, as the arrival of low-cost exchange-traded funds (ETFs) offered similar investment returns while allowing investors to trade them during regular market hours.
Investors have benefited from declining fund fees for years, meaning that more of their investment returns are staying in their own pocket than ever before. While fund companies may not find that a positive development, it’s hard to see it as anything but a benefit to long-term investors.
— Brian Baker, CFA, Bankrate senior investing reporter
Even if you don’t opt for a no-fee fund, it’s important to keep an eye on fees. Many mutual funds charge pricey sales loads and high expense ratios, both of which can cost you big over time. And it makes little sense to pay high fees when many funds — including those from E-Trade, Fidelity and Schwab mentioned above — are tracking the same key index, such as the S&P 500 stock index, one of the best long-term investments.
“It’s not an exaggeration to say that you could save literally tens of thousands of dollars over an investing lifetime by investing in low-cost funds,” says Baker.
Bottom line
Investors have benefited for years from declining fund fees, and fee-free funds from E-Trade and Fidelity help investors bring their fees to literally zero. If there’s a downside, it’s that you’ll need to be a client of these brokers to take advantage of these no-cost funds.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.
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