Guide to ETFs: Understanding Exchange-Traded Funds
Learn how ETFs track indices, their liquidity advantages, and how they compare to unit trusts in Singapore.
How ETFs Track Indices
ETFs are designed to track indices, offering liquidity advantages compared to unit trusts in Singapore. Index tracking ETFs typically have lower fees and charges than actively managed investment funds.
Comparing ETFs and Unit Trusts
When comparing ETFs to unit trusts in Singapore, consider the fee structure. ETFs generally have lower management fees than actively managed funds, and there is usually no sales charge, although buying and selling may involve transaction costs.
Checking the Product Structure
Before investing, check with your financial institution whether the product you are considering is an SIP. Note that there are different ways to structure an ETF even if its investment objective is to track the same underlying index, such as cash-based ETFs.