Fidelity Boosts Young Investor Appeal With Fractional Trading

Need to Know

• Fidelity launched real-time fractional shares trading for stocks and ETFs, otherwise known as dollar-based investing.
• The new, simplified way of investing allows investors to purchase as little as 0.001 of a share regardless of how much the share costs. 
• Fractional shares trading will only be available through Fidelity’s mobile app and will happen in real-time during market hours. 
• Fidelity currently has over 23 million retail brokerage accounts and helps over 30 million people invest.

Analysis 

Fidelity is simplifying investing with its launch of fractional trading, making investing a possibility for anyone, regardless of income. The move is meant to appeal to young investors who are looking to buy big-ticket stocks, which cost upwards of $1,400 in the case of Alphabet and Google.

Fractional trading allows investors to trade as little as 0.001 of share regardless of overall stock cost. Fractional trading, also known as dollar-based trading reduces the barrier-of-entry into a world that many find overwhelming. 

“Investing at Fidelity just got easier, and more accessible, with dollar-based investing,” said Scott Ignall, head of Fidelity’s retail brokerage business in a release. “Leveraging Fidelity’s award-winning mobile apps and brokerage platform, customers can now own a piece of their favorite companies and ETFs based on how much they want to invest, independent of the share price.”

Unlike some firms that execute fractional trades at the end of the trading day, Fidelity will execute all of their dollar-based investing in real-time, allowing customers to be made aware of the current share price. In an effort to embrace shifting customer habits towards all things digital, all fractional trades will be available only through the Fidelity mobile app. 

With over 23 million retail brokerage accounts Fidelity helps more than 30 million people invest their own life savings, holding true to their mission to “inspire better futures and deliver better outcomes for the customers and businesses we serve.”

“Fidelity’s size, private structure, and leading positions across various marketplaces (including retail, institutional, and intermediary) are unmatched in our industry and put us in a unique position to deliver greater value to our customers,” said Ignall in the release.

Stock trading startup Robinhood announced fraction trading in December and now finds itself competing head-to-head against one of the largest asset managers in the world.

Fidelity currently manages assets under administration of over $8.3 trillion.