Investing in fractional shares has changed the game for small investors. You no longer need to save up hundreds or thousands of dollars to invest in high-quality mutual funds or exchange-traded funds (ETFs). With the rise of fintech platforms like Fidelity, Schwab, SoFi, Robinhood, and M1 Finance, fractional share investing is accessible and efficient, even if you're starting with just $5.
But which funds are actually best suited for fractional share investors in 2025? In this in-depth guide, we'll explore:
- The benefits of fractional share investing
- The best mutual funds and ETFs available in fractional amounts
- Top platforms that support fractional investing
- Key strategies for building wealth with fractional shares
- Expert tips for minimizing risk while maximizing diversification
Let's dive in.
What Are Fractional Shares?
Fractional shares represent a portion of a whole share of a security. For example, if Amazon (AMZN) trades at $180 per share, you could invest just $18 and receive 0.10 shares. The same applies to ETFs and mutual funds.
Fractional share investing makes high-cost assets more accessible and allows investors to build diversified portfolios without needing significant capital upfront.
Benefits of Investing in Fractional Shares
Accessibility: No need to wait until you can afford a whole share.
Diversification: Spread small amounts of capital across dozens of funds or sectors.
Automatic Investing: Ideal for dollar-cost averaging with recurring contributions.
Great for Beginners: Removes the psychological hurdle of large initial investments.
Low Minimums: Many platforms now allow purchases as low as $1.
Efficient Use of Capital: Every dollar gets invested, without idle cash waiting to meet share minimums.
Best ETFs for Fractional Share Investing in 2025
1. Vanguard Total Stock Market ETF (VTI)
- Expense Ratio: 0.03%
- Why It’s Great: Offers exposure to the entire U.S. equity market, from small-caps to large-caps. Ideal for diversified, long-term growth.
- Perfect For: Passive investors and long-term wealth building.
2. Schwab U.S. Dividend Equity ETF (SCHD)
- Expense Ratio: 0.06%
- Why It’s Great: Invests in quality U.S. companies with strong dividend histories. Solid performance and income potential.
- Perfect For: Investors seeking income and stability.
3. iShares Core S&P 500 ETF (IVV)
- Expense Ratio: 0.03%
- Why It’s Great: Tracks the S&P 500 index, offering exposure to 500 of the largest U.S. companies.
- Perfect For: Core holding in any portfolio.
4. Vanguard Total International Stock ETF (VXUS)
- Expense Ratio: 0.07%
- Why It’s Great: Complements U.S. stocks with global exposure including emerging markets.
- Perfect For: Global diversification.
5. ARK Innovation ETF (ARKK)
- Expense Ratio: 0.75%
- Why It’s Great: Focuses on disruptive innovation (Tesla, CRISPR, AI, etc.). Higher risk, but high growth potential.
- Perfect For: Risk-tolerant investors with long horizons.
Best Mutual Funds for Fractional Investing
1. Fidelity ZERO Total Market Index Fund (FZROX)
- Expense Ratio: 0.00%
- Why It’s Great: No expense ratio, no minimum investment, and broad market exposure.
- Perfect For: Low-cost, diversified investing.
2. Vanguard Target Retirement 2050 Fund (VFIFX)
- Expense Ratio: 0.08%
- Why It’s Great: Automatically adjusts asset allocation as you near retirement. A true "set it and forget it" fund.
- Perfect For: Retirement-focused investors.
3. T. Rowe Price Blue Chip Growth Fund (TRBCX)
- Expense Ratio: 0.69%
- Why It’s Great: Active management focused on large-cap growth companies. Historically strong performance.
- Perfect For: Investors seeking high growth and active management.
4. Fidelity Contrafund (FCNTX)
- Expense Ratio: 0.81%
- Why It’s Great: Focuses on undervalued growth stocks. Long track record of outperformance.
- Perfect For: Aggressive growth investors.
5. Vanguard Wellesley Income Fund (VWINX)
- Expense Ratio: 0.23%
- Why It’s Great: Conservative allocation between stocks and bonds. Emphasizes income and stability.
- Perfect For: Risk-averse investors and retirees.
Top Platforms for Buying Fractional Shares of Funds
Fidelity Investments
- Best For: Mutual funds + ETFs
- Fractional Shares Available: Yes, including many mutual funds
- Minimums: $1 minimum on many funds
- Perks: Access to Fidelity ZERO funds, robust research tools
Charles Schwab
- Best For: ETF investors
- Fractional Shares Available: Through Schwab Stock Slices
- Minimums: $5
- Perks: Great for index investing with Schwab funds like SWPPX and SCHD
M1 Finance
- Best For: Automated investing and fractional ETFs
- Fractional Shares Available: Yes
- Minimums: $100 to start
- Perks: Pie-based portfolios, automatic rebalancing
SoFi Invest
- Best For: Beginners
- Fractional Shares Available: Yes
- Minimums: $1
- Perks: Free financial planning, beginner-friendly interface
Robinhood
- Best For: Mobile-first ETF investing
- Fractional Shares Available: Yes
- Minimums: $1
- Perks: No commissions, easy to use
Strategy: How to Build a Fractional Share Portfolio
Step 1: Determine Your Risk Tolerance
- Conservative: Mix of income and capital preservation (e.g., SCHD, VWINX)
- Balanced: Combination of growth and income (e.g., VTI, VXUS, SCHD)
- Aggressive: Focused on capital appreciation (e.g., ARKK, TRBCX)
Step 2: Choose a Core Holding
Select a low-cost, diversified fund like VTI or FZROX as your base. These can anchor your portfolio with broad exposure.
Step 3: Add Satellites
Complement your core with smaller positions in growth, international, or thematic ETFs (e.g., ARKK, VXUS).
Step 4: Rebalance Periodically
Once a year, rebalance your fractional portfolio to maintain target asset allocation. Most platforms now support auto-rebalancing.
Sample Portfolios Using Fractional Funds
Beginner Portfolio (Total: $100)
- $40 – VTI (U.S. total market)
- $30 – VXUS (International stocks)
- $20 – SCHD (Dividend income)
- $10 – ARKK (Growth)
Retirement Portfolio (Age 30, Target Date 2055)
- $100 – VFIFX (Vanguard Target Retirement 2055 Fund)
Income Portfolio
- $60 – SCHD (Dividend ETF)
- $30 – VWINX (Conservative income fund)
- $10 – Bond ETF (e.g., BND)
Tax Efficiency of Fractional Share Funds
- ETFs like VTI and IVV are very tax-efficient due to their structure.
- Mutual funds may produce capital gains distributions, especially actively managed ones.
- Use tax-advantaged accounts (IRA, Roth IRA) when possible for mutual funds.
Expert Tips for Fractional Fund Investors
- Start with index funds: Low cost, broad exposure, and less volatility.
- Use recurring deposits: Automate your investments for dollar-cost averaging.
- Avoid high-fee funds: Expense ratios above 1% eat into long-term returns.
- Use a Roth IRA: Fractional shares make Roth IRA investing accessible for beginners.
- Don’t over-diversify: 3–5 solid ETFs/funds are enough for most portfolios.
- Check for dividend reinvestment: Many platforms allow fractional dividend reinvestment, compounding your returns.
- Review expense ratios regularly: As your portfolio grows, minimizing fees becomes more impactful.
Common Questions about Fractional Shares
Can you buy fractional shares of mutual funds?
Yes—some platforms like Fidelity and Schwab offer mutual funds in fractional amounts. However, ETFs are more commonly supported across all brokers.
Is it safe to invest in fractional shares?
Absolutely. Fractional shares represent real ownership. The only difference is quantity, not quality.
What’s better for small investors—ETFs or mutual funds?
ETFs are often better for small investors because:
- They trade like stocks
- Are more widely supported for fractional investing
- Often have lower expense ratios
But mutual funds may still be superior for:
- Retirement target-date funds
- Hands-off investing
- Automatic reinvestment options
Final Thoughts
Fractional share investing has democratized access to the best funds in the market. You no longer need to choose between diversification and affordability—now you can have both.
Whether you're using VTI for total market exposure, SCHD for dividend income, or FZROX for a zero-fee portfolio, there's never been a better time to build wealth with small amounts of money.
Take advantage of platforms like Fidelity, Schwab, and M1 Finance to get started with just a few dollars—and build a long-term, diversified portfolio designed for growth.