A fractional share is a portion of a stock that is less than one full share. It allows you to invest a specific dollar amount rather than buying an entire share.
Why does eToro offer fractional shares?
Fractional shares make investing more accessible, allow diversification with smaller amounts of capital, and enable clients to invest in real shares without using complex instruments.
Do I still receive dividends if I only own a fraction of a share?
Yes. You are entitled to dividends in proportion to the amount of the share you own. For example, if a company pays a $1.00 dividend per share and you own 0.5 (half) of a share, you will receive $0.50. These are credited to your account once the payment is confirmed.
What is the main disadvantage of buying fractional shares instead of whole shares?
The primary downside is portability. While whole shares can often be transferred to another brokerage, fractional shares cannot be transferred outside of the eToro platform. If you decide to leave eToro, you would need to sell the fractional portion and withdraw the cash value.
How are the prices for fractional shares determined?
The prices you see on the platform are based on live feeds from major exchanges. For US shares, the price is pulled from NASDAQ; for European stocks, it is pulled from CBOE. This ensures you are buying your fraction at the same market rate as a whole share.
Is there a difference between how fractional and whole shares are held on eToro?
No. Fractional shares are held in custody under the same terms as whole shares and provide the same economic benefits, including proportional dividends and corporate action adjustments.
How are corporate actions handled for fractional shares?
Corporate actions are applied proportionally. This includes dividends, splits, reverse splits, and other adjustments based on the size of your fractional holding.
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Dividends: Once the Payment of the Cash Dividend is confirmed, eToro credits the per-share compensation (fractional shares receive the relative amount based on your holdings).
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Splits: We apply the same split ratio in all of your holdings on the same effective day as the exchange.
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Reverse splits: Like regular splits, the same ratio is applied to all holdings on the effective date.
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Rights issue: We do not distribute rights; instead, we distribute the cash equivalent of the Corporate Action. The amount to be compensated is calculated by the eligible closing price, applying the adjustment factor provided. Payment is processed to you after we liquidate all of the rights we received from the custodian on the trading dates of the rights.
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Voting rights: We support voting rights for fractional shares only for US securities.
Is the market risk different when buying fractional shares?
No. Market risk is the same whether you hold a fractional share or a whole share.
What happens if a company becomes insolvent and I own a fractional share?
You retain your fractional entitlement. If the fractional holding cannot be transferred, it may be liquidated and the cash value returned to you.
