Understanding Exchange-Traded Funds: Index Tracking and Fees
Learn how ETFs track indices, their liquidity advantages, and fee comparisons with unit trusts in Singapore.
What Are Exchange-Traded Funds?
Exchange-traded funds (ETFs) are investment products that track indices. They offer liquidity advantages and can be compared with unit trusts available in Singapore.
How ETFs Track Indices and Their Fees
ETFs that track indices generally have fees and charges that are usually lower than those of actively managed investment funds. This is because ETFs tend to have lower management fees, and there is typically no sales charge, although buying and selling may involve other costs.
What to Check with Your Financial Institution
Before investing, check with your financial institution whether the product you are considering is an SIP. Additionally, 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.