Risks Of Fractional Shares

Adam Rosen - Lead financial writer

Updated 05-Jun-2023

Risks Of Fractional Shares

Fractional shares, also known as fractional ownership, is a relatively new concept in the world of stock trading. Instead of buying a whole share of a company, investors can now buy a fraction of a share. This allows investors to diversify their portfolios and invest in a wider range of companies, even if they don't have a lot of money to invest. While this new investment option is gaining popularity, it also comes with its own set of risks.

  • IC Markets Fractional Shares

    Visit IC Markets

    🤴 IC Markets is Used By: 180,000
    ⚡ IC Markets is Regulated by: Australian Securities and Investments Commission (ASIC), Financial Services Authority (FSA), Cyprus Securities and Exchange Commission (CySEC)

    💵 What You Can Trade with IC Markets: Forex, Majors, Energies, Metals, Agriculturals,
    💵 Instruments Available with IC Markets: 232

    📈 IC Markets Inactivity Fees: No
    💰 IC Markets Withdrawal Fees: No
    💰 IC Markets Payment Methods: Credit Cards, VISA, MasterCard, Debit Cards, Visa, MasterCard, Bank Transfer, PayPal, Neteller, Neteller VIP, Skrill, Poli, Cheque, BPAY, UnionPay, FasaPay, QIWI, RapidPay, Klarna, Electronic wallets (eWallets), Broker to Brokers, Thai Internet Banking, Vietnamese Internet Banking,

    IC Markets Risk warning : Losses can exceed deposits

  • Roboforex Fractional Shares

    Visit Roboforex

    🤴 Roboforex is Used By: 10,000
    ⚡ Roboforex is Regulated by: Financial Services Commission (FSC) License 000138/437

    💵 What You Can Trade with Roboforex: Forex, Minors, Majors, Exotics, Indices, Metals,
    💵 Instruments Available with Roboforex: 100

    📈 Roboforex Inactivity Fees: No
    💰 Roboforex Withdrawal Fees: Yes
    💰 Roboforex Payment Methods: Credit cards, VISA, MasterCard, JCB, Debit cards, Bank Transfer, Electronic wallets (eWallets), Neteller, Skrill, Perfect Money, AdvCash, Bitcoin, WebMoney, BPAY, China UnionPay, FasaPay, CashU, QIWI, Yandex Money, WeChat Pay, ecoPayZ, AstroPay, Sofort, Giropay, Poli, Wepay, iDEAL, Payoneer,

    Roboforex Risk warning : Losses can exceed deposits

  • AvaTrade Fractional Shares

    Visit AvaTrade

    🤴 AvaTrade is Used By: 200,000
    ⚡ AvaTrade is Regulated by: Central Bank of Ireland, Australian Securities and Investments Commission (ASIC), Financial Services Authority (FSA), South African Financial Sector Conduct Authority (FSCA), Financial Stability Board (FSB), Abu Dhabi Global Markets (ADGM), Financial Regulatory Services Authority (FRSA), British Virgin Islands Financial Services Commission (BVI)

    💵 What You Can Trade with AvaTrade: Forex, Minors, Cryptocurrencies, Majors, Exotics, Indices, UK Stocks, US Stocks, Energies, Metals, Agriculturals, ETFs, IPO, Bonds,
    💵 Instruments Available with AvaTrade: 1000

    📈 AvaTrade Inactivity Fees: No
    💰 AvaTrade Withdrawal Fees: No
    💰 AvaTrade Payment Methods: Credit cards, VISA, MasterCard, Bank Transfer, Electronic wallets (eWallets), PayPal, Neteller, WebMoney, Payoneer,

    AvaTrade Risk warning : 71% of retail CFD accounts lose money

  • FP Markets Fractional Shares

    Visit FP Markets

    🤴 FP Markets is Used By: 10,000
    ⚡ FP Markets is Regulated by: Australian Securities and Investments Commission (ASIC), Cyprus Securities and Exchange Commission (CySEC), Financial Services Authority (St. Vincent and the Grenadines)

    💵 What You Can Trade with FP Markets: Forex, Minors, Majors, Exotics, Indices, Metals,
    💵 Instruments Available with FP Markets: 100

    📈 FP Markets Inactivity Fees: No
    💰 FP Markets Withdrawal Fees: No
    💰 FP Markets Payment Methods: Credit cards, VISA, MasterCard, Debit cards, Bank Transfer, Electronic wallets (eWallets), Neteller, BPAY, POLi, PayPal, Neteller, Skrill, PayTrust, NganLuong VN, Fasapay, Broker to Broker, OnlinePay China, Directa24, Klarna, PayTrust88, Payoneer,

    FP Markets Risk warning : Losses can exceed deposits

  • NordFX Fractional Shares

    Visit NordFX

    🤴 NordFX is Used By: 10,000
    ⚡ NordFX is Regulated by: Cyprus Securities and Exchange Commission (CySEC), License No: 209/13

    💵 What You Can Trade with NordFX: Forex, Majors, Metals,
    💵 Instruments Available with NordFX: 50

    📈 NordFX Inactivity Fees: No
    💰 NordFX Withdrawal Fees: No
    💰 NordFX Payment Methods: Bank Transfer, Neteller, PerfectMoney, WebMoney, FasaPay, CashU, Payza, QIWI,

    NordFX Risk warning : Losses can exceed deposits

  • Plus500 Fractional Shares

    Visit Plus500

    🤴 Plus500 is Used By: 22,000,000
    ⚡ Plus500 is Regulated by: Plus500UK Ltd authorized & regulated by the FCA (#509909), Plus500CY Ltd authorized & regulated by CySEC (#250/14), Plus500AU Pty Ltd (ACN 153301681), ASIC in Australia AFSL #417727, FMA in New Zealand, FSP #486026 and Authorised Financial Services Provider in South Africa FSP #47546

    💵 What You Can Trade with Plus500: Forex, Minors, Cryptocurrencies, Majors, Exotics, Indices, US Stocks, UK Stocks, Energies, Metals, Agriculturals, ETFs,
    💵 Instruments Available with Plus500: 2500

    📈 Plus500 Inactivity Fees: Yes
    💰 Plus500 Withdrawal Fees: No
    💰 Plus500 Payment Methods: Credit cards, VISA, MasterCard, Bank Transfer, Electronic wallets (eWallets), PayPal, Skrill,

    Plus500 Risk warning : 86% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

  • XTB Fractional Shares

    Visit XTB

    🤴 XTB is Used By: 250,000
    ⚡ XTB is Regulated by: Financial Conduct Authority (FCA), FCA number FRN 522157, Cyprus Securities and Exchange Commission (CySEC), CySEC Licence Number: 169/12, Comision Nacional del Mercado de Valores, Komisja Nadzoru Finansowego, Belize International Financial Services Commission (IFSC) under license number IFSC/60/413/TS/19, Polish Securities and Exchange Commission (KPWiG), Dubai Financial Services Authority (DFSA), Dubai International Financial Center (DIFC),Financial Sector Conduct Authority (FSCA), XTB AFRICA (PTY) LTD licensed to operate in South Africa

    💵 What You Can Trade with XTB: Forex, Minors, Cryptocurrencies, Majors, Exotics, Indices, UK Stocks, US Stocks, Pennystocks, Energies, Metals, Agriculturals, ETFs,
    💵 Instruments Available with XTB: 4000

    📈 XTB Inactivity Fees: Yes
    💰 XTB Withdrawal Fees: No
    💰 XTB Payment Methods: Credit cards, MasterCard, Maestro, Visa, Debit cards, Bank Transfer, Electronic wallets (eWallets), PayPal, Neteller, Skrill, Poli, Paysafe, Payoneer,

    XTB Risk warning : 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

  • Pepperstone Fractional Shares

    Visit Pepperstone

    🤴 Pepperstone is Used By: 89,000
    ⚡ Pepperstone is Regulated by: Financial Conduct Authority (FCA), Australian Securities and Investments Commission (ASIC), Cyprus Securities and Exchange Commission (CySEC), Federal Financial Supervisory Authority (BaFin), Dubai Financial Services Authority (DFSA), Capital Markets Authority of Kenya (CMA), Pepperstone Markets Limited is incorporated in The Bahamas (number 177174 B), Licensed by the Securities Commission of the Bahamas (SCB) number SIA-F217

    💵 What You Can Trade with Pepperstone: Forex, Minors, Cryptocurrencies, Majors, Exotics, Indices, Energies, Metals,
    💵 Instruments Available with Pepperstone: 100

    📈 Pepperstone Inactivity Fees: Yes
    💰 Pepperstone Withdrawal Fees: No
    💰 Pepperstone Payment Methods: Credit cards, VISA, MasterCard, Debit cards, Bank Transfer, Electronic wallets (eWallets), PayPal, Neteller, BPAY, POLi, UnionPay, FasaPay, QIWI, Payoneer,

    Pepperstone Risk warning : CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80.9% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money

  • XM Fractional Shares

    Visit XM

    🤴 XM is Used By: 3,500,000
    ⚡ XM is Regulated by: Financial Services Commission (FSC), Cyprus Securities and Exchange Commission (CySEC), Australian Securities and Investments Commission (ASIC)

    💵 What You Can Trade with XM: Forex, Stock CFDs, Commodity CFDs, Minors, Majors, Exotics, Equity Indices CFD, Energies CFD, Precious Metals
    💵 Instruments Available with XM: 1000

    📈 XM Inactivity Fees: Yes
    💰 XM Withdrawal Fees: No
    💰 XM Payment Methods: Credit cards, Debit cards, Bank Transfer, Electronic wallets (eWallets), Moneta, ABAQOOS, PRZELEWY24, Neteller, PerfectMoney, WebMoney, UnionPay, FasaPay, CashU, Payza, QIWI, SOFORT, Giropay, Payoneer, Skrill,

    XM Risk warning : CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77.74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

  • eToro Fractional Shares

    Visit eToro

    🤴 eToro is Used By: 20,000,000
    ⚡ eToro is Regulated by: Financial Conduct Authority (FCA), Cyprus Securities and Exchange Commission (CySEC), Markets In Financial Instruments Directive (MiFID), Australian Securities and Investments Commission (ASIC)

    💵 What You Can Trade with eToro: Forex, Minors, Cryptocurrencies, Majors, Exotics, Indices, UK Stocks, US Stocks, Energies, Metals, Agriculturals, ETFs,
    💵 Instruments Available with eToro: 2000

    📈 eToro Inactivity Fees: Yes
    💰 eToro Withdrawal Fees: Yes
    💰 eToro Payment Methods: Credit cards, VISA, MasterCard, Maestro, Debit Cards, Bank Transfer, PayPal, Neteller, Skrill, WebMoney, Giropay, eWallets,

    eToro Risk warning : 77% of retail investor accounts lose money when trading CFDs with this provider.

  • FXPrimus Fractional Shares

    Visit FXPrimus

    🤴 FXPrimus is Used By: 10,000
    ⚡ FXPrimus is Regulated by: Cyprus Securities and Exchange Commission (CySEC), Markets In Financial Instruments Directive (MiFID), Vanuatu Financial Services Commission (VFSC)

    💵 What You Can Trade with FXPrimus: Forex, Minors, Majors, Exotics, Indices, UK Stocks, US Stocks, Energies, Metals,
    💵 Instruments Available with FXPrimus: 130

    📈 FXPrimus Inactivity Fees: No
    💰 FXPrimus Withdrawal Fees: Varies
    💰 FXPrimus Payment Methods: Credit cards, VISA, MasterCard, Debit cards, Bank Transfer, Electronic wallets (eWallets), Neteller, Skrill, Payoneer, SafeCharge, TrustPay, EmerchantPay, Bitcoin, UnionPay, FasaPay, Giropay,

    FXPrimus Risk warning : Losses can exceed deposits

  • easyMarkets Fractional Shares

    Visit easyMarkets

    🤴 easyMarkets is Used By: 142,500
    ⚡ easyMarkets is Regulated by: Cyprus Securities and Exchange Commission (CySEC), Australian Securities and Investments Commission (ASIC), Financial Services Authority (FSA), British Virgin Islands Financial Services Commission (BVI)

    💵 What You Can Trade with easyMarkets: Forex, Minors, Cryptocurrencies, Majors, Exotics, Indices, Energies, Metals, Agriculturals, Options,
    💵 Instruments Available with easyMarkets: 200

    📈 easyMarkets Inactivity Fees: No
    💰 easyMarkets Withdrawal Fees: No
    💰 easyMarkets Payment Methods: Credit cards, MasterCard, Maestro, American Express, JCB, Astropay, Debit cards, Bank Transfer, SOFORT, GiroPay, iDeal, Bpay, Electronic wallets (eWallets), Skrill, Neteller, WebMoney, UnionPay, WeChatPay, FasaPay, STICPAY,

    easyMarkets Risk warning : Your capital is at risk

  • Trading 212 Fractional Shares

    Visit Trading 212

    🤴 Trading 212 is Used By: 15,000,000
    ⚡ Trading 212 is Regulated by: Financial Conduct Authority (FCA), Financial Supervision Commission (FSC)

    💵 What You Can Trade with Trading 212: Forex, Minors, Cryptocurrencies, Majors, Exotics, Indices, UK Stocks, US Stocks, Energies, Metals, ETFs, Bonds,
    💵 Instruments Available with Trading 212: 10000

    📈 Trading 212 Inactivity Fees: No
    💰 Trading 212 Withdrawal Fees: No
    💰 Trading 212 Payment Methods: Credit cards, MasterCard, VISA, Debit cards, Bank Transfer, Electronic wallets (eWallets), PayPal, Skrill, Dotpay, Carte Bleue, Direct eBanking, Apple Pay, Google Pay, iDeal, Giropay,

    Trading 212 Risk warning : CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

  • Admiral Markets Fractional Shares

    Visit Admiral Markets

    🤴 Admiral Markets is Used By: 10,000
    ⚡ Admiral Markets is Regulated by: Financial Conduct Authority (FCA), Cyprus Securities and Exchange Commission (CySEC), Australian Securities and Investments Commission (ASIC), Jordan Securities Commission (JSC)

    💵 What You Can Trade with Admiral Markets: Forex, Minors, Cryptocurrencies, Majors, Exotics, Indices, UK Stocks, US Stocks, Energies, Metals, ETFs, Bonds,
    💵 Instruments Available with Admiral Markets: 148

    📈 Admiral Markets Inactivity Fees: No
    💰 Admiral Markets Withdrawal Fees: No
    💰 Admiral Markets Payment Methods: Credit cards, Visa, MasterCard, Debit cards, Bank Transfer, Electronic wallets (eWallets), PayPal, Neteller, Skrill, SOFORT, Safety Pay, Przelewy, iDEAL, Klarna,

    Admiral Markets Risk warning : Losses can exceed deposits

  • SpreadEx Fractional Shares

    Visit SpreadEx

    🤴 SpreadEx is Used By: 10,000
    ⚡ SpreadEx is Regulated by: Financial Conduct Authority (FCA)

    💵 What You Can Trade with SpreadEx: Forex, Minors, Cryptocurrencies, Majors, Exotics, Indices, UK Stocks, US Stocks, Pennystocks, Energies, Metals, Agriculturals, ETFs, IPO, Bonds, Options, Treasuries,
    💵 Instruments Available with SpreadEx: 15000

    📈 SpreadEx Inactivity Fees: No
    💰 SpreadEx Withdrawal Fees: 0, minimum £50
    💰 SpreadEx Payment Methods: Credit cards, VISA, Switch, Maestro, Debit cards, Bank Transfer, Payoneer,

    SpreadEx Risk warning : Losses can exceed deposits

  • HYCM Fractional Shares

    Visit HYCM

    🤴 HYCM is Used By: 10,000
    ⚡ HYCM is Regulated by: Financial Conduct Authority (FCA), FCA reference number 186171, Cyprus Securities and Exchange Commission (CySEC), CySEC license number 259/14, Cayman Islands Monetary Authority (CIMA), CIMA reference number 1442313, Dubai financial services authority (DFSA), DFSA license number 000048

    💵 What You Can Trade with HYCM: Forex, Minors, Cryptocurrencies, Majors, Exotics, Indices, UK Stocks, Energies, Metals, Agriculturals,
    💵 Instruments Available with HYCM: 100

    📈 HYCM Inactivity Fees: Yes
    💰 HYCM Withdrawal Fees: No
    💰 HYCM Payment Methods: Credit cards, Debit cards, Bank Transfer, PayPal, WebMoney, Payoneer,

    HYCM Risk warning : Losses can exceed deposits

  • Markets.com Fractional Shares

    Visit Markets.com

    🤴 Markets.com is Used By: 4,000,000
    ⚡ Markets.com is Regulated by: Cyprus Securities and Exchange Commission (CySEC), Financial Sector Conduct Authority (FSCA), Financial Conduct Authority (FCA), Australian Securities and Investments Commission (ASIC), BVI Financial Services Commission (BVI FSC)

    💵 What You Can Trade with Markets.com: Forex, Minors, Cryptocurrencies, Majors, Exotics, Indices, UK Stocks, US Stocks, Energies, Metals, Agriculturals, ETFs, Bonds,
    💵 Instruments Available with Markets.com: 2200

    📈 Markets.com Inactivity Fees: Yes
    💰 Markets.com Withdrawal Fees: No
    💰 Markets.com Payment Methods: Credit cards, Debit cards, Bank Transfer, Electronic wallets (eWallets), Skrill, Neteller, PayPal,

    Markets.com Risk warning : 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money

  • ThinkMarkets Fractional Shares

    Visit ThinkMarkets

    🤴 ThinkMarkets is Used By: 500,000
    ⚡ ThinkMarkets is Regulated by: Financial Conduct Authority (FCA), Australian Securities and Investments Commission (ASIC), Financial Sector Conduct Authority (FSCA), Financial Services Authority Seychelles (FSA), TF Global Markets (UK) Limited is authorised and regulated by the Financial Conduct Authority FRN 629628, TF Global Markets (AUST) Limited is the holder of Australian Financial Services License number 424700, TF Global Markets (South Africa)(Pty) Ltd is an Authorised Financial Services Provider (FSP No 49835),TF Global Markets Int Limited Is authorised and regulated by the Financial Services Authority Firm Reference Number SD060

    💵 What You Can Trade with ThinkMarkets: Forex, Minors, Cryptocurrencies, Majors, Exotics, Indices, Energies, Metals,
    💵 Instruments Available with ThinkMarkets: 1500

    📈 ThinkMarkets Inactivity Fees: Yes
    💰 ThinkMarkets Withdrawal Fees: No
    💰 ThinkMarkets Payment Methods: Credit cards, Debit cards, Bank Transfer, Electronic wallets (eWallets), Neteller, Skrill, BitPay,

    ThinkMarkets Risk warning : CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71.89% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money

  • Swissquote Fractional Shares

    Visit Swissquote

    🤴 Swissquote is Used By: 300,000
    ⚡ Swissquote is Regulated by: Swiss Financial Market Supervisory Authority (FINMA), Commission de Surveillance du Secteur Financier (CSSF), Financial Conduct Authority, Dubai Financial Services Authority (DFSA), Hong Kong Securities and Futures Commission (SFC), Monetary Authority of Singapore (MAS)

    💵 What You Can Trade with Swissquote: Forex, Minors, Majors, Exotics, Indices, UK Stocks, US Stocks, Pennystocks, Energies, Metals, Bonds,
    💵 Instruments Available with Swissquote: 100

    📈 Swissquote Inactivity Fees: No
    💰 Swissquote Withdrawal Fees: $10
    💰 Swissquote Payment Methods: Credit cards, Debit cards, Bank Transfer, Payoneer,

    Swissquote Risk warning : Losses can exceed deposits

  • Axi Fractional Shares

    Visit Axi

    🤴 Axi is Used By: 10,000
    ⚡ Axi is Regulated by: Financial Conduct Authority (FCA), Australian Securities and Investments Commission (ASIC), Dubai Financial Services Authority (DFSA), Financial Service Authority of St. Vincent and the Grenadines (FSA)

    💵 What You Can Trade with Axi: Forex, Minors, Cryptocurrencies, Majors, Exotics,
    💵 Instruments Available with Axi: 100

    📈 Axi Inactivity Fees: No
    💰 Axi Withdrawal Fees: No
    💰 Axi Payment Methods: Credit cards, Debit cards, Bank Transfer, Neteller, BPAY, UnionPay, Payoneer,

    Axi Risk warning : Losses can exceed deposits

Lack of Liquidity

One of the biggest risks of investing in fractional shares is the lack of liquidity. Because fractional shares are not as widely traded as whole shares, it can be difficult to find buyers or sellers for your shares. This can make it difficult to get out of your investment quickly in case of an emergency or if market conditions change.

Increased Risk of Fraud

Another risk of fractional shares is the increased risk of fraud. Because fractional shares are not as well-regulated as whole shares, it's easier for fraudsters to take advantage of unsuspecting investors. This can include everything from Ponzi schemes to insider trading. To protect yourself from fraud, it's important to do your due diligence and only invest in reputable companies.

Less Control

When you invest in fractional shares, you have less control over the company compared to if you owned a whole share. You may have a smaller say in the company's management and decision-making. This can be a problem for investors who want to have a greater say in the direction of the company they are investing in.

Less Dividends

Another potential downside of investing in fractional shares is that you may receive less dividends. Dividends are typically paid out per share, so if you own a fraction of a share, you will receive a proportionally smaller dividend. This can be a problem for investors who rely on dividends as a source of income.

Less Transparency

Fractional shares also lack transparency compared to whole shares. In whole shares, it's easier to track the company's performance, financials, and other crucial information. With fractional shares, it can be more difficult to get the information you need to make informed investment decisions.

Advantages Of Fractional Shares

Fractional shares offer several advantages to investors. Firstly, they enable investors to diversify their portfolios and invest in a wider range of companies. This can help reduce risk by spreading investments across different companies and industries. Additionally, fractional shares can also make it more accessible for new and small investors to invest in the stock market, as they don't have to have large amounts of money to invest.

Disadvantages Of Fractional Shares

While fractional shares offer several advantages, they also come with their own set of risks and disadvantages. One of the main risks is that fractional shares are not as widely traded as whole shares, which can make it difficult to find buyers or sellers for your shares. Additionally, fractional shares may also be less transparent and less regulated, which can make it easier for fraudsters to take advantage of unsuspecting investors.

Risks Of Fractional Shares Verdict

Fractional shares offer investors the opportunity to diversify their portfolios and invest in a wider range of companies. However, it also comes with its own set of risks such as lack of liquidity, increased risk of fraud, less control, less dividends, and less transparency. Before investing in fractional shares, it's important to weigh the risks against the potential benefits and do your due diligence to ensure you are making an informed decision. It's important to consider your investment goals and risk tolerance before deciding to invest in fractional shares. Additionally, you can consult with a financial advisor to understand if fractional shares are a good fit for your investment portfolio.

Fractional shares are a relatively new concept in the world of stock trading and offer a new way for investors to diversify their portfolios and invest in a wider range of companies, even if they don't have a lot of money to invest. However, it's important to weigh the potential benefits against the risks, and to do your due diligence before investing in fractional shares.

The evolution of online brokerage firms in the last 5 years, the increase in the use of technology and the rising demand for more accessible and affordable investment opportunities has caused more and more brokerages to offer retail traders fractional shares.