Investing in mutual funds through TD Ameritrade (now part of Charles Schwab) offers access to thousands of funds with varying strategies, fees, and risk levels. Whether you’re building a retirement portfolio or seeking growth, choosing the right mutual funds is crucial.
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How TD Ameritrade’s Merger with Schwab Affects Mutual Fund Investors
Since TD Ameritrade was acquired by Charles Schwab, investors now have access to:
- Schwab’s proprietary mutual funds (e.g., SWPPX, SWTSX)
- No-transaction-fee (NTF) mutual funds from Vanguard, Fidelity, and others
- Commission-free trading for ETFs (but mutual funds still have fees unless they’re NTF)
Key Change:
- Schwab’s mutual funds now dominate TD Ameritrade’s platform.
- Some third-party funds may require fees (check before buying).
Best Mutual Funds on TD Ameritrade (Schwab Platform) in 2024
1. Best S&P 500 Index Fund
Schwab S&P 500 Index Fund (SWPPX)
- Expense Ratio: 0.02% (ultra-low cost)
- Minimum Investment: $1
- Performance (10-Yr Avg Return): ~12%
- Why It’s Great: Nearly identical to Vanguard’s VFIAX but with a lower minimum investment.
2. Best Total Stock Market Fund
Schwab Total Stock Market Index Fund (SWTSX)
- Expense Ratio: 0.03%
- Minimum Investment: $1
- Performance (10-Yr Avg Return): ~11.5%
- Why It’s Great: Covers the entire U.S. market (small, mid, and large-cap stocks).
3. Best International Stock Fund
Schwab International Index Fund (SWISX)
- Expense Ratio: 0.06%
- Minimum Investment: $1
- Performance (10-Yr Avg Return): ~6.5%
- Why It’s Great: Low-cost exposure to developed international markets (Europe, Japan, etc.).
4. Best Bond Fund for Stability
Schwab U.S. Aggregate Bond Index Fund (SWAGX)
- Expense Ratio: 0.04%
- Minimum Investment: $1
- Performance (10-Yr Avg Return): ~2.5%
- Why It’s Great: Provides diversification with U.S. government and corporate bonds.
5. Best Actively Managed Growth Fund
Fidelity Contrafund (FCNTX)
- Expense Ratio: 0.86%
- Minimum Investment: $0 (on Schwab)
- Performance (10-Yr Avg Return): ~13%
- Why It’s Great: Strong historical returns, managed by Fidelity’s top stock pickers.
Comparison: Schwab vs. Vanguard vs. Fidelity Funds on TD Ameritrade
| Fund Name | Type | Expense Ratio | Min. Investment | 10-Yr Return |
|---|---|---|---|---|
| SWPPX (Schwab) | S&P 500 Index | 0.02% | $1 | ~12% |
| VFIAX (Vanguard) | S&P 500 Index | 0.04% | $3,000 | ~12% |
| FXAIX (Fidelity) | S&P 500 Index | 0.015% | $0 | ~12% |
| SWTSX (Schwab) | Total Market | 0.03% | $1 | ~11.5% |
| FZROX (Fidelity) | Total Market | 0.00% | $0 | ~11% |
| SWISX (Schwab) | International | 0.06% | $1 | ~6.5% |
Takeaway:
- Schwab’s funds are competitive with Vanguard and Fidelity.
- Fidelity’s ZERO funds (FZROX) have no fees, but they’re only available at Fidelity.
- Vanguard’s funds often require $3,000 minimums (except ETFs).
How to Choose the Best Mutual Funds on TD Ameritrade
1. Consider Your Investment Goals
- Retirement (IRA/401k)? → Index funds (SWPPX, SWTSX)
- Aggressive Growth? → Actively managed funds (FCNTX)
- Income & Stability? → Bond funds (SWAGX)
2. Watch the Fees
- Expense ratios above 1% can eat into returns over time.
- No-transaction-fee (NTF) funds save costs.
3. Diversify Across Asset Classes
A balanced portfolio might include:
- 60% U.S. Stocks (SWTSX)
- 20% International (SWISX)
- 20% Bonds (SWAGX)
Final Thoughts: Are TD Ameritrade’s Mutual Funds Worth It?
✅ Yes, if you want:
- Low-cost index funds with no minimums (SWPPX, SWTSX)
- Access to Schwab’s strong fund lineup
- Easy integration with a Schwab brokerage account
❌ No, if you prefer:
- Fidelity’s ZERO expense ratio funds (only available at Fidelity)
- Vanguard’s Admiral Shares (if you have $3,000+ to invest)
Best Strategy for TD Ameritrade Investors:
- Use Schwab index funds (SWPPX, SWTSX) for core holdings.
- Add an international fund (SWISX) for diversification.
- Include bonds (SWAGX) if you want lower risk.
