Guide to ETFs: Understanding Exchange-Traded Funds
Learn how ETFs track indices, their liquidity advantages, and fee comparisons to unit trusts in Singapore.
What Are ETFs?
Exchange-traded funds (ETFs) are investment vehicles designed to track specific indices. In Singapore, understanding how ETFs track indices is key to evaluating their potential. They offer liquidity advantages compared to some other investment options.
Fees and Charges
Index-tracking ETFs generally have fees and charges that are usually lower than those of actively managed investment funds. This is because ETFs typically have lower management fees, and there is usually no sales charge when you buy and sell. However, you should check with your financial institution whether the product you are considering is an SIP, as this may affect the fee structure.
How ETFs Are Structured
Even if two ETFs have the same investment objective to track the same underlying index, there are different ways to structure an ETF. One approach is a cash-based ETF. Understanding these structural differences can help you compare products more effectively.