How does Fractional investing in shares and ETFs work? How are my fractional investments protected? Is Fractional Investing a type of derivative? Our helpful FAQs helps detail all you need to know about investing with fractions in shares & ETFs at XTB.
Do you offer Fractional shares investing?
Yes we do. This means you can invest in fractions or parts of shares without having to invest in the value of a whole share. This can help you to invest smaller amounts in publicly traded stocks or ETFs which typically have a higher market value, such as Tesla, Amazon or Meta. At XTB, we offer fractional shares investing across multiple instruments including US shares, EU shares and UK shares as well as ETFs.
What are Fractional shares?
Fractional shares are a type of instrument which enables you to invest in parts or fractions of an asset that is less than a whole share. For example, you are able to invest in half a share of Meta as opposed to a whole share, meaning your exposure is 50% of a typical share. Thereby you are making an investment in a fraction of a share (i.e. half or 0.5). Importantly, we classify fractional shares in much the same way as a whole share, meaning you have a fiduciary right to some of the same benefits as a whole share ownership such as dividends.
Are fractional shares a type of derivative?
No, at XTB we don’t treat fractional shares as a type of derivative.Whilst fractional shares cannot be technically treated exactly the same as a whole share (because you cannot have a voting right of half a share), at XTB we grant our clients a fiduciary right to a fraction of the benefits of a whole share such as dividends, stock splits, rights issues and other corporation actions. Nevertheless, some benefits of whole share ownership cannot be passed onto fractional owners such as voting rights because this is currently difficult to enforce.
What instruments can I buy fractional shares in?
We currently offer fractional investments across a wide range of stocks and ETFs that are traded on multiple exchanges in the US, EU and UK. To see which shares have fraction investing enabled, please refer to our instruments table.
What are the benefits of fractional investing?
Fractional investing comes with multiple benefits which are best categorised as follows:
- Flexibility - by allowing you to invest in a small part or fraction of a whole share in publicly traded companies and ETFs. This means you can tailor your investment decisions to specific levels, risk tolerance and investment amounts.
- Availability - investing no longer requires a lot of money! Now you can invest exactly how much you want regardless of the current share price or a given company. So if you want to invest $500 in Tesla shares, you can now do that to the exact amount as opposed to rounding up or down to a whole share.
- Diversification - You can now diversify your portfolio with a wider range of stocks and ETFs from around the world by the mere fact you can invest in fractions. This can help reduce your overall risk and increase your chances of achieving your long term investment goals.
Are fractional shares investing commission free?
Yes! We offer both fractional and regular investing in real stocks and ETFs with 0% commission up to 100,000 euro per calendar month. If you invest more than 100,000 euro per calendar month, you will pay a commission of 0.2% with a minimum of 10 euro for any investments above this level.
How are my fractional shares protected?
We protect your fractional shares investment in the same way as your whole shares. We keep your whole shares in a fully segregated custody account.
For your fractional shares, we will safeguard these investments in a separate custody account with the shares held in trust on your behalf where you have a fiduciary right to the ownership benefits of a fraction of a whole share to which you have invested. Whenever you buy a fractional share, XTB will hold a corresponding whole share to which you have a fiduciary right to the fractional equivalent of your investment. For example, lets say you buy 0.7 of Tesla shares. XTB will hold 1 whole share and to this you will own a fiduciary right to the economic benefits of 0.7 of this whole share.
Can I earn dividends with my fractional investments?
Yes! You are entitled to the economic benefits of a fractional share in much the same way as a whole share. Meaning you benefit from dividends which equates to the fractional holding of your investment.
What rights do I not have with fractional shares compared to whole shares?
Simply put, you keep the economic rights to your fractional shares, such as dividends. However, you will not benefit from certain rights which are only applicable to whole share owners such as voting rights or attending annual general meetings or exceptional general meetings.
When I buy a fraction of a share, do I receive the same price as a whole share?
Yes! When you place an order to buy a fraction of a share, XTB will either buy a whole share in the respective OMI market or if we already hold a whole share of that OMI instrument, we will give you a fraction of this existing share that we hold on our books. The purchase price of the fractional share corresponds to the best current offer to sell OMI in the selected organised market at the time of placing the order (best execution price).
What are the tax implications of owning fractional shares?
As per the government's website you may have to pay Capital Gains Tax if you make a profit (‘gain’) when you sell (or ‘dispose of’) shares or other investments.The amount of capital gains tax you pay will depend on your income and the amount of profit.
Similarly, if you receive dividends from fractional shares, you may have to pay income tax on those dividends. The amount of income tax you pay will depend on your income and the amount of the dividend.
XTB can provide reports on what you have invested in to help with your self-assessment submission to HMRC.
Please visit or contact HM Revenue & Customs (HMRC) to ensure you have the most accurate and up-to-date information.
Is investing in Fractional Shares risky?
Investing in fractional shares carries similar risks to investing in whole shares. The value of your investment can go up or down based on the performance of the underlying asset. To mitigate risk, diversify your portfolio.
This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.
