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Fractional Share Investing – Buying a Slice Instead of the Whole Share

The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors about investing in fractional shares.

What are Fractional Shares?

A fractional share is when you own less than one full share of a stock or other security.

Why Invest in Fractional Shares?

Fractional shares are a way to invest when you do not have enough money to purchase a full share of a particular stock. For example, if XYZ stock trades at $1000 per share, but you only have $100 to invest, fractional share investing would allow you to purchase a fraction of the XYZ stock ($1000/$100), or .1 shares.

How does Fractional Share Investing Work?

Generally, you can place orders to buy or sell fractional shares in either dollar amounts or share amounts. For example, if XYZ Stock trades for $1000, you could place an order for a fractional share such as .5 shares or for a dollar amount such as $500.  The way you buy and sell fractional shares differs between brokerage firms that provide this service to their customers. Below, we highlight some of the issues that may impact how fractional share investing works at your brokerage firm. 

Important Items to Consider Before Investing in Fractional Shares


Not every brokerage firm offers fractional share investing. Even if your brokerage firm offers this service, it may not offer this service to all its customers. Contact your brokerage firm to find out if they offer fractional share investing, and if they do, if it’s available to all its customers.

Types of Securities to Trade

Brokerage firms may limit the types of securities you can buy and sell using fractional shares. Some brokerage firms only allow fractional share investing in stocks, while others allow it in stocks and exchange-traded funds (ETFs). Brokerage firms may also limit the types of stocks and ETFs available for fractional share investing. For example, some firms only allow fractional share investing in S&P 500 stocks. If your brokerage firm offers fractional share investing, ask them to provide you with a list of stocks or other securities you can buy or sell with fractional shares.

Trade Execution

Some brokerage firms allow you to buy or sell fractional shares in real-time just like full shares. However, some brokerage firms aggregate orders to handle their customer’s buying and selling of fractional shares.  Aggregating orders means rather than filling each fractional share order in real-time, the brokerage firm collects these orders throughout the day and then executes one or more large orders to fulfill them.  The process your brokerage firm uses to handle buying and selling of fractional shares may impact the price you pay or receive for a fractional share order. Make sure you ask your brokerage firm for specific details on how it handles each order to buy and sell fractional shares.

Order Types and Trading Limitations

Brokerage firms generally offer several ways to buy or sell (order types) securities. However, some firms do not allow the use of certain order types to buy or sell fractional shares. For example, some firms only allow market orders for fractional share investing. In addition to order type limitations, some brokerage firms also have trading limitations related to fractional shares such as:

  • Requiring minimum size or dollar amounts for fractional share orders
  • Limiting or eliminating after-hours trading of fractional shares
  • Limiting the trading platforms where you can place fractional share orders (e.g., only through the brokerage firm’s mobile app)

Dividends and Other Corporate Actions

When you own fractional shares you will still receive dividends and participate in other corporate actions such as stock splits or reverse stock splits. Generally, you will participate in these corporate actions based on the percentage of a whole share that you own. For example, if you own .75 shares of XYZ stock, and XYZ distributes a dividend of $10.00 per share, you would receive $7.50. Make sure you contact your brokerage firm for specific details on how they handle dividends and other corporate actions for fractional shares.

Voting Rights: You may not have voting rights if you own fractional shares. Your ability to exercise proxy voting will depend on how your brokerage firm’s fractional share investing program works. Some brokerage firms allow it, with special procedures, and some firms do not allow it at all. Ask your brokerage firm whether you will have any voting rights associated with fractional share purchases.


Some brokerage firms may charge fees for fractional share transactions. Ask your brokerage firm if any additional fees apply when you buy or sell fractional shares.


Liquidity refers to the ability to quickly and easily sell a stock or other security. If a stock in which you purchase fractional shares becomes illiquid, the underlying fractional shares will be illiquid as well.  Some brokerage firms have indicated that they do not guarantee the liquidity of fractional shares, even if fully shares of the stock are liquid.  This means you may have difficulty selling fractional shares in certain circumstances and could potentially lose money on the investment. Ask your brokerage firm and read your brokerage firm’s account agreement to see if you need to consider liquidity when selling fractional shares.


You generally cannot transfer fractional shares to another brokerage firm. If you decide to transfer your brokerage account to a different brokerage firm you may have to sell any fractional shares in your account.

Additional Resources

Investor Bulletin: Understanding Order Types

Call OIEA at 1-800-732-0330, ask a question using this online form, or email us at

Visit, the SEC’s website for individual investors.

Receive Investor Alerts and Bulletins from the Office of Investor Education and Advocacy (“OIEA”) by email or RSS feed

This Investor Bulletin represents the views of the staff of the Office of Investor Education and Advocacy.  It is not a rule, regulation, or statement of the Securities and Exchange Commission (“Commission”).  The Commission has neither approved nor disapproved its content.  This Investor Bulletin, like all staff guidance, has no legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations for any person.


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