Yes, you can buy index funds on Robinhood, but only through exchange-traded funds (ETFs)
Robinhood does not offer mutual funds, which is the traditional way most people own index funds. Instead, you buy index funds on Robinhood by purchasing exchange-traded funds (ETFs) that track the same indexes. An ETF is a fund that holds many stocks or bonds and trades like a single stock on an exchange. Most major indexes — the S&P 500, the Nasdaq-100, the total U.S. stock market — have ETFs that track them, and you can buy these ETFs on Robinhood with no commission.
The main difference between an ETF and a traditional index mutual fund is how you buy it. With a mutual fund, you place an order and it settles at the end of the trading day at a price the fund company calculates. With an ETF, you buy it during market hours like you would buy a stock, and the price changes throughout the day. For most people building a long-term portfolio, this difference does not matter much.
Key Takeaways
- Robinhood lets you buy index-tracking ETFs commission-free, but does not offer mutual funds.
- Popular index ETFs on Robinhood include SPY and VOO (S&P 500), QQQ (Nasdaq-100), and VTI (total U.S. stock market).
- You can set up automatic recurring investments in ETFs through Robinhood's recurring investment feature.
- ETF prices change throughout the trading day, so your order may fill at a different price than when you placed it.
Which index ETFs are available on Robinhood
Robinhood carries thousands of ETFs, including all the major index-tracking ones. The most common are SPY, VOO, and IVV, which all track the S&P 500. QQQ tracks the Nasdaq-100 (large tech and growth stocks). VTI tracks the entire U.S. stock market. BND and AGG track bond indexes. VEA and VXUS track international stocks. You can search for any of these by ticker symbol in the Robinhood app.
The choice between similar ETFs usually comes down to the expense ratio — the annual fee the fund charges as a percentage of your investment. VOO charges 0.03 percent per year, while SPY charges 0.09 percent. Over decades, that small difference compounds. Check the expense ratio before you buy by tapping the ETF and scrolling to the fund details.
How to buy an index ETF on Robinhood
Open the Robinhood app and tap the search icon at the bottom. Type the ticker symbol of the ETF you want — for example, VOO for the Vanguard S&P 500 ETF. Tap the result to open the fund's page. You will see the current price, a chart, and fund details including the expense ratio and holdings.
Tap the "Buy" button. Enter the number of shares you want to buy, or the dollar amount you want to spend. Robinhood will show you the estimated cost and ask you to confirm. Tap "Buy [ETF name]" to place the order. During market hours (9:30 a.m. to 4 p.m. Eastern time on weekdays), your order will fill within seconds at or near the price shown. Outside market hours, your order will wait until the market opens the next trading day.
Setting up automatic investments in index ETFs
Robinhood lets you set up recurring investments so you buy the same ETF on a schedule without placing an order each time. Tap the ETF you want to invest in, then tap "Invest." Choose how much you want to invest and how often — weekly, biweekly, or monthly. Robinhood will automatically buy that ETF on your chosen day using cash in your account.
This feature is useful if you want to dollar-cost average, which means investing the same amount regularly regardless of price. Over time, this can reduce the impact of buying at market peaks. You can pause or cancel a recurring investment at any time from the same screen.
Understanding ETF prices and order timing
ETF prices move throughout the trading day as the stocks inside them trade. When you place a buy order during market hours, Robinhood shows you the current price, but your order may fill at a slightly different price by the time it executes — usually within a few cents. This is called slippage. For large orders or volatile ETFs, slippage can be larger.
If you place an order outside market hours (before 9:30 a.m. or after 4 p.m. Eastern time), your order will not fill until the market opens. Your order will execute at the opening price the next trading day, which may be higher or lower than the price you saw when you placed it. If you want more control over the price, you can set a limit order — you tell Robinhood the maximum price you will pay, and it only fills if the ETF trades at or below that price.
Fees and costs of buying index ETFs on Robinhood
Robinhood charges no commission to buy or sell ETFs. You pay only the expense ratio built into the ETF itself, which is typically very low for index funds — usually between 0.03 and 0.20 percent per year. This fee is deducted automatically from the fund's value and does not appear as a separate charge on your account.
If you sell an ETF at a profit, you may owe capital gains tax. Robinhood does not charge a tax, but the IRS does. If you hold the ETF for more than one year before selling, you pay long-term capital gains tax, which is usually lower than short-term rates. Robinhood sends you a tax form (Form 1099) at the end of the year showing your gains and losses.
Comparing index ETFs on Robinhood
| ETF Ticker | What It Tracks | Expense Ratio |
|---|---|---|
| VOO | S&P 500 | 0.03% |
| SPY | S&P 500 | 0.09% |
| QQQ | Nasdaq-100 | 0.20% |
| VTI | Total U.S. Stock Market | 0.03% |
| BND | Total U.S. Bond Market | 0.03% |
| VXUS | International Stocks | 0.08% |
Frequently Asked Questions
Can I buy fractional shares of index ETFs on Robinhood?
Yes. Robinhood lets you buy fractional shares of most ETFs, meaning you can invest any dollar amount even if it does not add up to a whole share. For example, you can invest $50 in an ETF that costs $400 per share and own 0.125 shares. This makes it easier to start investing with a small amount of money.
What is the difference between VOO and SPY?
Both track the S&P 500, but VOO has a lower expense ratio (0.03 percent versus 0.09 percent). Over 30 years, that difference adds up significantly. SPY is older and more heavily traded, which some traders prefer for very short-term buying and selling. For long-term index investing, VOO is usually the better choice.
Can I set up automatic investments in multiple ETFs at once?
Yes. You can create separate recurring investments for different ETFs on different schedules. For example, you could invest $200 monthly in VOO and $100 monthly in BND. Each recurring investment is set up independently through the ETF's page in the app.
Do I pay taxes on ETF dividends?
Yes. Most index ETFs pay dividends from the stocks they hold. Robinhood automatically reinvests these dividends into more shares of the ETF unless you change your settings. You still owe tax on the dividends in the year they are paid, even though you did not sell anything. Robinhood reports this on your year-end tax form.
What happens if Robinhood goes out of business?
Your ETFs are held in your brokerage account and are protected by the Securities Investor Protection Corporation (SIPC) up to $500,000 per account. If Robinhood closes, SIPC would transfer your holdings to another brokerage. Your ETFs themselves are not affected — they continue to exist and pay dividends regardless of what happens to Robinhood.