A basket of securities (stocks, bonds, commodities) that trades on an exchange like a single stock. Low-cost, transparent, and tax-efficient — the default building block for most passive portfolios.
An Exchange-Traded Fund is a basket of securities — stocks, bonds, commodities, or a mix — that trades on a stock exchange like a single share. You can buy and sell ETFs intra-day at market prices.
ETFs are the workhorse of modern passive investing. The largest ETF in the world (SPDR S&P 500, ticker SPY) holds ~US$500 billion in assets and is the cheapest, most liquid way to own the US market.
Pricing: ETFs trade continuously at market prices. Unit trusts price once daily at Net Asset Value.
Costs: ETF expense ratios run 0.03% – 0.30% for broad-market funds; Singapore unit trusts commonly charge 1% – 2% plus sales charges of 1% – 5%.
Tax efficiency: ETFs are structurally tax-efficient (in-kind creations and redemptions avoid capital gains distributions). Critical in markets with capital gains tax — less so in Singapore, where individual capital gains aren't taxed.
SGX-listed ETFs (e.g. STI ETF, Nikko AM-StraitsTrading Asia ex-Japan REIT ETF, ABF Singapore Bond Index Fund) trade in SGD with no FX cost.
Irish-domiciled ETFs on the London Stock Exchange (e.g. CSPX, VWRA, IWDA) — the gold standard for non-US investors because of the favourable 15% US dividend withholding tax (versus 30% for US-domiciled ETFs).
US-listed ETFs (VTI, VOO, SCHD) — most variety and lowest expense ratios, but suffer 30% US withholding tax on dividends and potential US estate tax exposure above the threshold.
Buying thematic ETFs in hype cycles — cannabis, ARK Innovation, blockchain. The same diversification doesn't apply when an ETF holds 30 stocks that all move together.
Holding S&P 500 + Total Market + Tech + QQQ together. Overlap is huge; you've just made a high-fee S&P 500 with extra tech tilt.
Ignoring liquidity. Stick to ETFs with daily volume above 100,000 shares and tight bid-ask spreads. Thin ETFs cost you on every trade.
An Exchange-Traded Fund — a basket of securities (stocks, bonds, or other assets) that trades on a stock exchange like a single share. You can buy and sell ETFs intra-day at market prices. They're the dominant low-cost vehicle for passive index investing.
Irish-domiciled ETFs on the London Stock Exchange are popular: CSPX (S&P 500), VWRA / IWDA (global / developed markets), EIMI (emerging markets), AGGG (global bonds). Irish domicile cuts US dividend withholding tax from 30% to 15% — a major edge over US-listed alternatives.
Via any brokerage with relevant market access — Interactive Brokers (IBKR), Tiger Brokers, Webull, Saxo, DBS Vickers, FSMOne. SGX-listed ETFs (STI ETF, Nikko AM ETFs) can also be bought through any Singapore broker.
For passive index exposure, almost always yes — ETF expense ratios run 0.03% – 0.20% versus 0.5% – 2% for unit trusts, plus sales charges. Unit trusts still have niche uses (CPF OA / SA investing where ETF options are limited; some active strategies without good ETF equivalents).