Orders & execution
Fractional shares
Buying part of a share, so you can invest a fixed sum rather than a whole number of shares.
How it works
Fractional dealing lets someone put $50 into a share priced at $800. The broker holds the whole share and allocates fractions across customers internally.
It makes regular fixed-amount investing straightforward and removes the leftover cash that whole-share dealing creates.
Where it misleads people
Fractions are usually a broker-internal arrangement rather than a registered holding. They often cannot be transferred to another broker and may have to be sold first, and voting rights on them are typically not passed through.
Related terms
- BrokerThe firm that holds your account and sends your orders to the market on your behalf.
- Nominee accountAn arrangement where your broker is the registered owner of your shares and you are the beneficial owner.
- Dollar-cost averagingInvesting a fixed amount at regular intervals, regardless of the price on the day.
More in Orders & execution
All 12 Orders & execution terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.