Singapore Unit Trust vs ETF Comparison 2026: A Complete Guide for Singapore Investors

Last Updated: 3 July 2026

Summary

Choosing between unit trusts and exchange-traded funds (ETFs) is one of the most common dilemmas facing Singapore investors in 2026. Both are pooled investment vehicles that provide diversification, but they differ significantly in fees, management style, trading mechanics, and suitability. In this comprehensive guide, we break down every aspect of unit trusts and ETFs available in the Singapore market, compare their costs and benefits, and help you decide which option is better suited to your financial goals. Whether you are a beginner or a seasoned investor, this comparison will equip you with the knowledge to make an informed decision.

What Are Unit Trusts?

A unit trust is a type of collective investment scheme where money from multiple investors is pooled together and managed by a professional fund manager. The fund manager uses this pooled capital to invest in a diversified portfolio of securities, which may include equities, bonds, money market instruments, and other assets. Each investor owns a proportionate share of the fund, represented by units, and the value of each unit is determined by the fund’s net asset value (NAV).

How Unit Trusts Work in Singapore

In Singapore, unit trusts are regulated by the Monetary Authority of Singapore (MAS). They are offered by various fund houses such as Fullerton Fund Management, Nikko Asset Management, Lion Global Investors, and many others. When you invest in a unit trust, you typically buy units at the prevailing NAV, which is calculated at the end of each trading day.

Unit trusts are available through multiple distribution channels in Singapore, including banks, financial advisers, online platforms, and fund supermarkets. Some popular platforms for buying unit trusts in Singapore include FSMOne, StashAway, Endowus, and dollardex. These robo-advisory and online platforms have made unit trusts more accessible and often offer reduced or zero sales charges.

Types of Unit Trusts Available in Singapore

• Equity funds: Invest primarily in stocks, either focused on a single market or globally diversified.
• Bond funds: Invest in fixed-income securities such as government and corporate bonds.
• Balanced or mixed-asset funds: Combine equities and bonds in varying proportions.
• Money market funds: Invest in short-term, low-risk instruments for capital preservation.
• Sector or thematic funds: Focus on specific industries such as technology, healthcare, or sustainable energy.

Key Features of Unit Trusts

• Active management: Most unit trusts are actively managed by professional fund managers who aim to outperform the market or a benchmark index.
• NAV-based pricing: Units are priced at the end-of-day net asset value per unit.
• Minimum investment: Typically SGD 500 to SGD 1,000 for a lump-sum investment, though some platforms allow regular investments from as low as SGD 50 per month.
• Fees: The total expense ratio (TER) for unit trusts in Singapore generally ranges from 1% to 2% per annum. Some funds may also charge an initial sales charge (up to 3%) or an exit fee, though these have been significantly reduced or eliminated on many online platforms.
• Liquidity: You can redeem your units on any business day, with proceeds typically credited within 3 to 5 business days. This is slower than selling an ETF on the exchange.
• Transparency: Fund holdings are disclosed periodically (usually quarterly or semi-annually), but not on a daily basis.

What Are ETFs?

An Exchange-Traded Fund (ETF) is a type of pooled investment that trades on a stock exchange, much like an individual share. ETFs typically aim to track the performance of a specific index, sector, commodity, or asset class. When you buy shares of an ETF, you gain exposure to all the underlying securities in that ETF’s portfolio.

How ETFs Work in Singapore

ETFs listed on the Singapore Exchange (SGX) can be bought and sold through any SGX-approved stockbroker during market trading hours. The price of an ETF fluctuates throughout the day based on supply and demand, unlike unit trusts which are priced once daily. You can place market orders, limit orders, and even use dollar-cost averaging strategies when investing in ETFs.

To buy ETFs on the SGX, you need a brokerage account. If you are looking for a comparison of stockbrokers in Singapore, check out our SGX Stock Brokers Comparison 2026 guide.

Types of ETFs Available in Singapore

• Index ETFs: Track a specific market index, such as the Straits Times Index (STI) or the S&P 500. For more on S&P 500 investing, read our guide on How to Invest in S&P 500 from Singapore.
• Sector ETFs: Focus on specific industries such as technology, healthcare, or financials.
• Commodity ETFs: Track the price of commodities like gold, silver, or oil.
• Bond ETFs: Provide exposure to fixed-income markets.
• REIT ETFs: Invest in real estate investment trusts. Our Singapore REIT Investment for Beginners article covers REITs in detail.
• Leveraged and inverse ETFs: Use derivatives to amplify returns or provide inverse exposure (suitable only for advanced investors).

Key Features of ETFs

• Passive management: Most ETFs track an index and are passively managed, though actively managed ETFs are growing in popularity.
• Intraday pricing: ETF prices change throughout the trading day based on market conditions.
• Lower fees: ETF expense ratios typically range from 0.1% to 0.7% per annum, making them significantly cheaper than most unit trusts.
• Minimum investment: You can buy ETFs in board lots (usually 100 units), so the minimum depends on the ETF’s share price. For many Singapore ETFs, the minimum investment is between SGD 100 and SGD 500.
• High transparency: ETF holdings are typically disclosed daily or frequently, so you always know what you own.
• Liquidity: ETFs can be bought and sold instantly during market hours, with settlement typically within 2 business days (T+2).

Detailed Comparison: Unit Trusts vs ETFs in Singapore (2026)

The following table provides a side-by-side comparison of unit trusts and ETFs across the most important dimensions for Singapore investors.

Feature	Unit Trusts	ETFs
Management Style	Primarily active (fund manager selects securities)	Primarily passive (tracks an index), though active ETFs exist
Total Expense Ratio (TER)	1.0% to 2.0% per annum	0.1% to 0.7% per annum
Sales / Entry Charges	Up to 3% (often waived on online platforms)	None (brokerage commission applies)
Minimum Investment	SGD 500 to SGD 1,000 (lump sum); SGD 50 to SGD 100 (regular plan)	SGD 100 to SGD 500 (one board lot of 100 units)
Pricing	End-of-day NAV	Intraday market price (real-time)
Trading Hours	Orders placed anytime, executed at end-of-day NAV	SGX trading hours (9:00 AM to 5:00 PM SGT)
Liquidity / Settlement	Redemption in 3 to 5 business days	Instant execution; settlement in T+2 business days
Transparency	Holdings disclosed quarterly or semi-annually	Holdings disclosed daily or weekly
Dividend Handling	May reinvest or pay out distributions	Typically pays out distributions (or accumulates)
Tax Treatment	No capital gains tax in Singapore; withholding tax may apply for foreign income	No capital gains tax in Singapore; withholding tax may apply for foreign dividends
CPFIS Approved	Yes (select funds only)	Yes (select ETFs only)
SRS Eligible	Yes (wide range)	Yes (listed ETFs on SGX)
Historical Returns (SG Market)	Varies widely; top equity funds may return 6-10% p.a. over 5 years, but many underperform benchmarks	STI ETF returned approximately 3-5% p.a. over the past 5 years (tracking STI); S&P 500 ETFs returned approximately 10-14% p.a.
Complexity	Simple to buy through platforms; no need for a brokerage account	Requires a brokerage account; similar to buying stocks

When Should You Choose a Unit Trust?

Unit trusts can be the better choice in several scenarios, particularly for investors who value professional management and simplicity.

You Want Active Management

If you believe that skilled fund managers can consistently outperform the market, unit trusts give you access to professional stock-picking and portfolio management. While the evidence on active management consistently beating benchmarks is mixed, some fund managers in Singapore and globally have demonstrated skill in certain market conditions or sectors.

You Prefer a Hands-Off Approach

Unit trusts are ideal for investors who want to set up a regular investment plan and not worry about placing trades. Platforms like Endowus and StashAway offer automated dollar-cost averaging into unit trusts, making it easy to invest consistently without monitoring the market.

You Want Exposure to Niche Markets or Strategies

Some investment themes and strategies are more readily available through unit trusts rather than ETFs. For example, if you are interested in a specific emerging market fund, a thematic equity fund, or a structured bond fund, you may find more options among unit trusts.

You Are Investing Through CPF or SRS with a Regular Plan

Many Singaporeans use their CPF-OA or SRS funds to invest in unit trusts through approved platforms. The ability to set up small, regular contributions makes unit trusts accessible even for investors with limited capital. If you are planning your SRS withdrawals, understanding the SRS Withdrawal Singapore Tax Rules 2026 will help you optimise your retirement income.

When Should You Choose an ETF?

ETFs are often the preferred choice for cost-conscious investors who favour a passive, transparent, and flexible approach to investing.

You Want the Lowest Possible Fees

The fee difference between unit trusts and ETFs is significant over the long term. A 1.5% annual fee on a unit trust versus a 0.3% fee on an ETF means you save 1.2% per year. Over 20 years on a SGD 100,000 portfolio, this fee difference alone could amount to more than SGD 30,000 in additional wealth. For most investors, minimising fees is one of the most reliable ways to improve long-term returns.

You Want Full Transparency and Control

ETFs provide daily disclosure of their holdings, so you always know exactly what you own. This level of transparency is unmatched by unit trusts, which typically only disclose holdings periodically. If you want to build a precise asset allocation and track exactly how your money is invested, ETFs are the better choice.

You Want to Trade Intraday

If you want the flexibility to buy and sell at specific prices during market hours, ETFs give you that capability. You can place limit orders, stop-loss orders, and react to market events in real time. Unit trusts, by contrast, only allow end-of-day execution.

You Want to Invest in Specific Indices

If you want to track the S&P 500, the Nasdaq 100, the Straits Times Index, or other well-known indices at the lowest cost, ETFs are the most direct and efficient way to do so. You can learn more about S&P 500 investing in our How to Invest in S&P 500 from Singapore guide.

You Want REIT Exposure

ETFs make it easy to invest in a diversified basket of REITs with a single trade. This is particularly useful for Singapore investors who want REIT exposure without picking individual REITs. For more on this topic, see our Singapore REIT Investment for Beginners article.

Popular Unit Trusts and ETFs in Singapore (2026)

Here are some of the most popular investment options available to Singapore investors in each category.

Popular ETFs on the SGX

• Nikko AM STI ETF (G3B): Tracks the Straits Times Index, providing exposure to the 30 largest companies listed on the SGX. The expense ratio is approximately 0.30% to 0.42%. This is the most popular ETF for Singapore market exposure.
• Lion-OCBC Securities Hang Seng TECH ETF (HST): Provides exposure to major Chinese technology companies listed in Hong Kong. This ETF has gained popularity among Singapore investors interested in the growth of China’s tech sector.
• Lion-OCBC Securities Hang Seng TECH ETF (another variant): Available in both SGD and USD denominations, giving investors currency flexibility.
• SPDR Straits Times Index ETF (ES3): Another option for STI tracking with competitive fees.
• Lion-OCBC Securities MSCI China ETF: Provides broader exposure to the Chinese market beyond just technology.

Popular Unit Trusts in Singapore

• Fullerton SGD Income Fund: A popular choice for income-seeking investors, this fund invests primarily in SGD-denominated bonds and fixed-income instruments. It is widely available on major platforms.
• Lion-OCBC Securities Hang Seng TECH ETF (unit trust version): Available as a unit trust for investors who prefer to invest through fund platforms rather than a brokerage account.
• Nikko AM Shenton Global Opportunities Fund: A globally diversified equity fund that has been a staple in many Singapore investors’ portfolios.
• Aberdeen Standard Singapore Equity Fund: Focuses on Singapore-listed equities with active management.
• Fullerton Lux – Asia Focus Fund: An equity fund focused on high-quality Asian companies with growth potential.
• Lion Global Singapore Dividend Equity Fund: Targets Singapore dividend-paying stocks for consistent income.

ETFs vs Unit Trusts: A Deeper Look at Fees

Fees are one of the most critical factors when choosing between unit trusts and ETFs. Let us examine the full cost picture for Singapore investors.

ETF Costs

• Expense ratio: 0.1% to 0.7% per annum (charged automatically, reducing the ETF’s NAV)
• Brokerage commission: Varies by broker, typically SGD 5 to SGD 25 per trade for SGX-listed ETFs
• No sales charge: You pay the market price with no additional entry fee

Unit Trust Costs

• Total expense ratio: 1.0% to 2.0% per annum
• Sales charge: Up to 3% (often 0% on platforms like FSMOne, Endowus, or StashAway)
• Switching fee: Some platforms charge a fee to switch between funds
• Redemption fee: May apply depending on the fund and platform

The Long-Term Impact of Fees

Consider two hypothetical Singapore investors who each invest SGD 50,000 and achieve a gross annual return of 7%. Investor A buys an ETF with a 0.3% expense ratio, and Investor B buys a unit trust with a 1.5% expense ratio. After 20 years:

• Investor A (ETF): Portfolio value approximately SGD 186,000
• Investor B (Unit Trust): Portfolio value approximately SGD 141,000

The difference of approximately SGD 45,000 is entirely due to fees. This illustrates why cost-conscious long-term investors often prefer ETFs. For more on building a low-cost investment portfolio, explore our SGX Stock Brokers Comparison 2026.

Regulatory Framework: MAS and CPFIS

Both unit trusts and ETFs available in Singapore are regulated by the Monetary Authority of Singapore (MAS). MAS ensures that fund managers and ETF issuers meet strict standards for governance, disclosure, and investor protection. You can learn more about investment regulations on the MAS website.

If you plan to invest using your CPF Ordinary Account, only products approved under the CPF Investment Scheme (CPFIS) are eligible. Both select unit trusts and ETFs (such as the Nikko AM STI ETF) are included on the CPFIS approved list. Always verify the latest approved list before investing.

Key Takeaways

• Fees matter: ETFs are significantly cheaper than unit trusts. Over a long investment horizon, lower fees compound into substantially higher wealth.
• Unit trusts offer active management: If you believe in the value of professional stock-picking, unit trusts give you access to experienced fund managers.
• ETFs provide transparency and flexibility: Daily holdings disclosure and intraday trading make ETFs the more transparent and flexible option.
• Both are available through CPF and SRS: Singapore investors can use their CPF-OA and SRS funds to invest in both unit trusts and approved ETFs.
• Minimum investment is accessible: Both unit trusts and ETFs are accessible to retail investors, with minimum investments often starting from SGD 50 to SGD 500.
• No capital gains tax in Singapore: Both unit trusts and ETFs benefit from Singapore’s zero capital gains tax policy.
• Consider a hybrid approach: Many Singapore investors use both ETFs and unit trusts in their portfolios to combine the benefits of low-cost index exposure with selective active management.
• Do your research: Always compare specific funds and ETFs based on their track record, fees, and alignment with your investment goals.

Conclusion

There is no one-size-fits-all answer to the unit trust vs ETF debate for Singapore investors in 2026. Both options have their strengths and are suitable for different types of investors and investment goals.

If you prioritise low costs, transparency, and a hands-on approach to investing, ETFs are likely the better choice. The low expense ratios, intraday trading, and daily transparency of ETFs make them particularly attractive for long-term, passive investors who want to track market indices at minimal cost.

On the other hand, if you value professional management, prefer a more hands-off approach, or want access to niche investment themes that may not be available through ETFs, unit trusts remain a solid option. The growth of online platforms has reduced the cost barrier for unit trusts, making them more competitive than ever.

Ultimately, the best approach for most Singapore investors may be a combination of both. Use ETFs for your core, low-cost market exposure (such as global equity indices), and consider unit trusts for specific actively managed strategies where you believe the fund manager adds value. Whatever you choose, the most important step is to start investing consistently and stay invested for the long term.

About the Author

Related: Financial Advisor vs DIY Investing Singapore 2026