By The Ledger desk · Last verified 11 October 2026
Both unit trusts and ETFs pool investors’ money into a basket of assets. The difference is how you buy and what you pay. A unit trust is bought from the fund manager through a bank, financial adviser, fund platform or robo-adviser, usually priced once a day at its net asset value (NAV). MoneySense puts typical sales charges at 1.5% to 5% and total expense ratios (TER) at 1.0% to 2.5% a year. An ETF is listed on an exchange such as SGX and traded through a broker throughout the day, like a share. Most track an index, usually carry no sales charge and have lower management fees, but you pay brokerage on each trade.
Neither is better in every case. Once you can read the fee line, choosing becomes much calmer.
Quick facts
- Unit trust management fees: about 1.0% to 2.0% a year for active funds, generally under 1% for passive funds.
- Between 20% and 60% of a fund’s management fee can be paid to the distributor as a trailer fee.
- Fund platform fees: 0% to 0.3% a year of holdings, per MoneySense.
- ETFs: no sales charge as a rule, but brokerage and any transfer taxes apply.
- Synthetic ETFs use derivatives and add counterparty risk; many are Specified Investment Products with extra buyer checks.
- Fees are charged whether the fund does well or not.
How they differ
| Unit trust | ETF | |
|---|---|---|
| Where you buy | Bank, adviser, fund platform, robo-adviser | Stock exchange, through a broker |
| Price | Once a day, at NAV (plus or minus charges) | Live market price during trading hours |
| Style | Mostly actively managed | Mostly passive, tracking an index |
| One-off costs | Sales charge 1.5% to 5%, or redemption fee; often discounted on platforms | Brokerage per trade; bid-ask spread |
| Ongoing costs | TER usually 1.0% to 2.5%, plus any platform or wrap fee | Expense ratio, usually lower |
| Small regular sums | Easy, often from low minimums | Possible through regular savings plans with some brokers |
Reading the fees on a unit trust
- Initial sales charge (1.5% to 5%) or redemption fee (1% to 5%): distributors usually charge one, not both.
- Switching fee: about 1% to move between funds of the same manager.
- Wrap account: around 2% to 3% upfront on new money plus about 1% a year, usually replacing sales and switching charges.
- TER: every fund-level cost combined, shown on the factsheet. Use it to compare like with like.
Worked example: S$10,000, held for a year
Ming puts S$10,000 into an active unit trust with a 3% sales charge and a 1.75% TER. His sister puts S$10,000 into an index ETF with a 0.3% expense ratio.
- Ming’s sales charge: 3% × S$10,000 = S$300, leaving S$9,700 invested.
- His yearly TER: 1.75% × S$9,700 = about S$170.
- Ming’s first-year cost: about S$470, before any platform fee.
- His sister’s yearly expense ratio: 0.3% × S$10,000 = S$30, plus her broker’s commission on the purchase.
The active fund must beat the index by well over a percentage point a year just to match. Buying the same fund on a low-cost platform with no sales charge narrows the gap considerably.
Where to buy
Unit trusts are sold by banks, licensed financial advisers, online fund platforms and robo-advisers; the same fund can cost very different amounts depending on the channel. ETFs on SGX are bought through any broker; shares can sit in your own CDP account or with a custodian broker. Check that any firm is licensed on MAS’s Financial Institutions Directory, and read the product highlights sheet before you commit.
The WahLiao Verdict
For most long-term savers, a low-cost, broad index ETF or index unit trust is the sensible core, because fees are the one return you can control. Pay for active management only when you understand the strategy and accept the higher cost. Whichever you pick, buy through the cheapest licensed channel, avoid paying a sales charge if a platform offers the same fund without one, and leave complex synthetic products to those who truly need them.
Questions people ask
Can I buy unit trusts with CPF or SRS?
Yes for CPFIS-included funds through CPFIS, and many funds accept SRS money. Check the channel supports the account you want to use.
What is tracking error?
The gap between an ETF’s return and its index, caused by costs, timing and how closely the fund can hold the index.
Are ETFs safer than unit trusts?
Not by structure alone. Risk depends on what the fund holds; an ETF of one sector can swing more than a balanced unit trust.
Do I pay tax on fund gains?
Singapore does not tax capital gains for individual investors, though withholding taxes inside foreign funds can reduce returns.
Sources: MoneySense (MAS), unit trusts: pricing and fees; MoneySense (MAS), guide to ETFs; Singapore Exchange, ETF investor guide. The Ledger explains; it does not advise.
Read next: Robo-Advisers in Singapore: How They Work, the Fees and What MAS Regulates · Dividends and Capital Gains in Singapore: What’s Taxed and What Isn’t · Back to The Ledger
For what’s worth it this week, with the bill shown, read The WahLiao Week.
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