Guide to ETFs: Understanding Exchange-Traded Funds
Learn how ETFs track indices, their liquidity advantages, and fee comparisons in Singapore.
How ETFs Track Indices
Exchange-traded funds (ETFs) are investment products that track indices. In Singapore, ETFs offer liquidity advantages and have fees that are usually lower than those of actively managed investment funds. There are different ways to structure an ETF even if its investment objective is to track the same underlying index; for example, a cash-based ETF is one such structure.
Comparing ETFs to Unit Trusts and Other Funds
When comparing ETFs with unit trusts, note that fees and charges tend to be lower than for actively managed investment funds. This is because ETFs have lower management fees and there is usually no sales charge, although if you buy and sell, some costs may apply. Check with your financial institution whether the product you are considering is an SIP.