Mutual funds v/s Unit Trusts | Best Investment Options in Singapore

Investment

There are numerous ways to grow your money (for example, through a unit trust, mutual fund, ETFs, or investment unit trust), but the difficult part is determining what is best for the current market conditions, your personal preferences, and risk tolerance. In this blog, we discuss mutual funds v/s unit trusts, ETFs, and more in Singapore. 

To make your life easier, we’ll go over some of the most common ways to grow your money, which, by the way, has grown in popularity since the stock market crashed and stagflation set in.

Mutual Funds v/s Unit Trusts, ETFs, and more in Singapore

What exactly are mutual funds?

When you purchase a mutual fund, you are pooling your money with that of other shareholders to invest in a portfolio of stocks, bonds, and other securities. The idea is that by pooling more money, you can enjoy a more diverse portfolio. Mutual funds are managed actively by professional fund managers, and profits can be reinvested or distributed as dividends. The mutual fund’s price is determined by the portfolio’s net asset value (NAV).

What exactly are unit trusts?

Unit trusts, like mutual funds, provide you with access to a portfolio of securities. When you buy unit trusts, you become the beneficiary of a trust, which changes the structure. The price of a unit trust fluctuates in response to market conditions and demand.

What exactly are ETFs?

ETFs, or exchange-traded funds, track the performance of an index, sector, commodity, or other types of asset, allowing you to invest in the aggregate performance of several securities. The Straits Times Index (STI) ETF, for example, tracks the performance of 30 of Singapore’s largest corporations. ETFs are highly liquid and have a fluctuating market price because they can be bought and sold on a stock exchange.

What is the difference between money market funds and cash management funds?

Money market funds allow you to earn a higher interest rate on cash held in them (compared to the base bank interest rate) in exchange for assuming less risk. The funds are invested in order to generate profits. Money market funds have the advantage of being able to be withdrawn whenever you want, just like a regular savings account. There is no lock-in period in most cases, but returns are not guaranteed.

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