Fidelity said Wednesday it is allowing retail investors to trade slivers of stocks and ETFs using its Mobile app, as my Barron’s colleague John Coumarianos reports.
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Investors can buy as little as 0.001 of a share. That means a Fidelity client should have been able to pick up a fraction of Google parent Alphabet worth just $1.45 on Wednesday morning, when a single share of the stock was trading at $1,452.04.
A Fidelity spokesperson says there’s still no time frame for launching fractional share trading on Fidelity.com or the company’s Active Trader Pro platform.
Charles Schwab made waves in October when he said his brokerage firm would soon allow clients to trade fractional shares of stocks online, but Schwab has yet to launch the capability. A Schwab spokesperson says the company is building out fractional trading for individual stocks and will make it available in 2020. Fintech companies including Betterment, M1 Finance, and Robinhood already offer it, CNBC notes.
The argument for fractional trading is that it allows people without a lot of money to invest—think 20-somethings just starting their careers--to construct diversified portfolios including companies such as Alphabet or Amazon, where single shares trade well north of $1,000.
For now, Fidelity is limiting fractional trading to retail accounts. When asked whether the firm would expand the offering to financial advisors who custody at Fidelity, a spokesperson tells Barron’s Advisor, “We are currently gauging demand for this capability from advisors and working with them to address how we can meet their specific trading needs.”
Of course, many full-service advisory clients have enough assets to enable them to buy full shares of stocks and ETFs, but fractional shares could make it easier for advisors to create diversified portfolios for smaller accounts.
--Ross Snel
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January 30, 2020 at 12:24AM
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Fidelity Rolls Out Fractional Trading - Barron's
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