Guide to ETFs: Understanding Exchange-Traded Funds

What Are ETFs?

Exchange-traded funds (ETFs) are investment products that track indices. Understanding how they track indices, their liquidity advantages, and how they compare to unit trusts in Singapore can help you evaluate them.

Fees and Comparison with Unit Trusts

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, although you may incur costs when buying and selling.

Important Checks and Structure

Before investing, check with your financial institution whether the product you are considering is an SIP (a specific investment product). Also note that there are different ways to structure an ETF even if its investment objective is to track the same underlying index; one example is a cash-based ETF.