In Singapore, investors often compare ETFs (Exchange-Traded Funds) and unit trusts when deciding how to invest in diversified funds. Both pool investors’ money into a portfolio of assets, but they differ significantly in how they are traded, priced, and charged. This page is for general information only and does not constitute financial advice.
What Is an ETF?
An ETF is a fund that trades on a stock exchange — such as the Singapore Exchange (SGX) — throughout the trading day, just like a stock. Most ETFs in Singapore are passively managed, meaning they track an index such as the Straits Times Index (STI), MSCI World, or S&P 500. You buy and sell ETF units through a brokerage account at real-time market prices. Examples: SPDR STI ETF (ES3), Nikko AM STI ETF (G3B), CSPX (S&P 500 on LSE).
What Is a Unit Trust?
A unit trust (also called a mutual fund) is a pooled investment vehicle managed by a professional fund manager. Unlike ETFs, unit trusts are typically priced once a day (based on NAV) and transacted through fund platforms such as FSMOne, Fundsupermart, or Endowus — not through a stock exchange. Most unit trusts are actively managed, meaning the manager aims to outperform a benchmark.
Key Differences: ETF vs Unit Trust
| Feature | ETF | Unit Trust |
|---|---|---|
| Traded on | Stock exchange (SGX, NYSE, LSE) | Fund platforms / banks |
| Pricing | Real-time market price | Once-daily NAV |
| Management style | Usually passive (index-tracking) | Usually active |
| Expense ratio | 0.05%–0.5% p.a. | 0.5%–2.0% p.a. |
| Sales charge | Brokerage commission only | Up to 5% (often 0–1.5% on platforms) |
| CPF/SRS eligible | Selected ETFs via CPFIS | Many approved unit trusts |
Cost Impact Over Time
The difference in expense ratios compounds significantly over long holding periods. An ETF charging 0.2% p.a. versus a unit trust charging 1.5% p.a. means an annual drag of 1.3% on your portfolio. On a S$100,000 portfolio over 20 years at 7% gross return, that 1.3% difference results in approximately S$70,000 less wealth at the end. Use our Compound Interest Calculator to model this.
When Might a Unit Trust Make Sense?
Unit trusts may suit investors who: want access to specific active strategies (e.g., a Singapore bond fund or Asia high-yield fund) not available as ETFs; prefer regular savings plans with small amounts (some unit trusts accept S$100/month via RSP); or invest through CPF/SRS on platforms like Endowus or FSMOne where the unit trust universe is broader. See our FSMOne referral code or Endowus referral code for platforms offering both ETFs and unit trusts at low cost.
Singapore Context: Which Is More Popular?
For self-directed investors in Singapore, low-cost ETFs (especially broad market index ETFs) have grown in popularity due to their transparency and cost efficiency. The Singapore REIT ETF guide covers how to invest in REIT ETFs. For CPF investing, both ETFs and unit trusts are available under CPFIS, with specific approved lists maintained by CPF Board.