Robinhood does not offer its own mutual funds, but you can buy mutual funds from other fund companies through a Robinhood brokerage account
Robinhood is a brokerage platform, not a fund company. It does not create or manage mutual funds the way Vanguard, Fidelity, or Schwab do. What Robinhood does offer is a way to purchase mutual funds issued by other companies — you can search for and buy funds from providers like Vanguard, Fidelity, iShares, and Invesco directly through your Robinhood account.
The mutual funds available depend on which fund companies Robinhood has partnered with and which funds those companies offer. Robinhood does not charge a transaction fee when you buy or sell most mutual funds on its platform, though the fund itself may have an expense ratio (an annual fee charged by the fund company).
If you are looking for mutual funds specifically, you should know that Robinhood also offers exchange-traded funds (ETFs), which work similarly to mutual funds but trade like stocks. Many people use ETFs through Robinhood because they trade throughout the day and often have lower expense ratios than mutual funds.
Key Takeaways
- Robinhood lets you buy mutual funds from other fund companies, but does not create or manage its own mutual funds.
- You can purchase funds from major providers like Vanguard, Fidelity, and iShares through a Robinhood brokerage account with no transaction fee.
- Each mutual fund charges its own expense ratio, which is a yearly cost separate from any Robinhood fees.
- Robinhood also offers ETFs, which are similar to mutual funds but trade throughout the day like individual stocks.
How to find and buy mutual funds on Robinhood
Open your Robinhood account and use the search bar to look up a specific mutual fund by its ticker symbol or name. Robinhood will show you the fund's current price, expense ratio, holdings, and performance history. You can then place an order to buy shares of that fund just as you would buy a stock.
Mutual funds on Robinhood typically settle at the end of the trading day, meaning your order executes at the fund's closing price rather than at a price you see in real time. This is different from stocks and ETFs, which trade throughout the day. If you place an order after the market closes, it will execute the next trading day.
Robinhood does not charge you a fee to buy or sell the mutual fund itself. However, the fund company charges an expense ratio, which is deducted from the fund's assets annually. This cost is built into the fund's price and is listed in the fund's prospectus.
Differences between buying mutual funds on Robinhood versus directly from a fund company
When you buy a mutual fund through Robinhood, you own the same fund shares as if you bought them directly from Vanguard or Fidelity. The fund's performance and holdings are identical. The main difference is the account structure and the tools available to you.
Buying through Robinhood means all your investments — stocks, ETFs, mutual funds, and options — sit in one account with one login. Buying directly from a fund company means opening a separate account with that company. Some people prefer one consolidated account; others prefer keeping fund investments separate.
Robinhood's interface is designed for active traders and shows real-time stock prices and charts. If you are buying mutual funds and holding them long-term, you may find the Robinhood interface less focused on the tools mutual fund investors typically use, such as fund comparison tools or detailed tax-loss harvesting reports. Fund companies' own platforms often include these features.
Mutual fund expense ratios and other costs to know
Every mutual fund charges an expense ratio — a percentage of your investment that goes to the fund company each year to cover management, administration, and other costs. A fund with a 0.05% expense ratio costs $5 per year on a $10,000 investment. A fund with a 1% expense ratio costs $100 per year on the same investment.
Robinhood does not add an extra layer of fees on top of the fund's expense ratio. You pay only what the fund company charges. Some mutual funds also charge a sales load, which is a commission paid when you buy or sell. Robinhood shows you whether a fund has a load before you purchase.
If you hold a mutual fund in a taxable Robinhood account (not a retirement account), you may owe taxes on distributions the fund pays out, such as dividends or capital gains. These distributions are separate from the expense ratio and happen regardless of whether you sell the fund.
Why some investors choose ETFs instead of mutual funds on Robinhood
ETFs are similar to mutual funds — they hold a basket of stocks or bonds and charge an expense ratio — but they trade like stocks throughout the day. On Robinhood, this means you can see the price of an ETF change minute by minute and buy or sell at any time during market hours.
Mutual funds on Robinhood execute only once per day at the closing price. If you want to trade in and out quickly or watch your position change in real time, an ETF may feel more natural on Robinhood's platform. Many ETFs also have lower expense ratios than comparable mutual funds.
Both mutual funds and ETFs can be held long-term in a retirement account or taxable account. The choice between them depends on your trading style, the specific funds or ETFs available, and their expense ratios.
Using mutual funds in Robinhood retirement accounts
You can hold mutual funds inside a Robinhood IRA (Traditional or Roth) or a Robinhood SEP IRA if you are self-employed. The mutual funds work the same way — you search for them, buy shares, and hold them. The difference is the tax treatment: money in a Traditional IRA grows tax-deferred, and money in a Roth IRA grows tax-free.
Robinhood does not charge account fees for IRAs, though the mutual fund itself still charges its expense ratio. If you are building a long-term retirement portfolio with mutual funds, a Robinhood IRA can be a low-cost way to do it, especially if you are buying no-load funds with low expense ratios.
One limitation: Robinhood does not offer automatic rebalancing or target-date funds (funds that automatically shift from stocks to bonds as you near retirement). If you want those features, you may need to use a fund company's own platform or a robo-advisor.
Frequently Asked Questions
Can I set up automatic monthly investments in a mutual fund on Robinhood?
Robinhood does not offer automatic recurring investments in mutual funds the way some fund companies or brokerages do. You must manually place each buy order. If you want automatic monthly contributions, you would need to set a reminder or use a different platform.
Do I pay capital gains taxes on mutual funds held in a Robinhood taxable account?
Yes. When you sell a mutual fund for a profit, you owe capital gains tax. You also owe taxes on distributions the fund pays out, such as dividends or capital gains distributions, even if you do not sell. These taxes are separate from the fund's expense ratio and depend on how long you held the fund and your tax bracket.
What happens if a mutual fund I own on Robinhood closes?
If a fund closes, the fund company liquidates it and sends you the proceeds, usually within a few weeks. You can then use that cash to buy a different fund or investment. Robinhood will notify you if a fund you own is closing.
Can I buy mutual funds with fractional shares on Robinhood?
Robinhood allows fractional share purchases for stocks and some ETFs, but mutual funds must be purchased in whole shares. This means you need enough cash to buy at least one full share of the fund you want.
Is there a minimum investment to buy a mutual fund on Robinhood?
Robinhood has no account minimum, but each mutual fund has its own minimum investment set by the fund company. Most funds require a minimum of $1,000 to $3,000 for the first purchase, though some have no minimum. Robinhood shows the minimum before you buy.