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Mutual Funds in Singapore: A Complete Guide for Beginner Investors

mutual funds singapore
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When you invest in mutual funds, your money will be pooled with other investors’ money and invested in various assets according to the fund’s objective. Also known as unit trusts, they adopt a trust structure, but it is important to note that not all funds use the trust structure.

With unit trusts, you invest in them by buying units in the fund. When the prices of the units rise above the price you bought them at, there is a capital gain. Some mutual funds also pay dividends

The price of one unit is based on the fund’s Net Asset Value divided by the number of outstanding units. The Net Asset Value is the fund assets’ market value, which includes cash, investments, payables, and other assets minus their expenses. The fund’s Net Asset Value is calculated every day to reflect the price change in the investment held by the fund.

What Are Mutual Funds?

A mutual fund or a unit trust is a pool of money from investors for investment purposes. The pool of money is from many investors who receive profit generated from the fund according to the share they hold on the pool.

Mutual funds are managed by fund managers, also known as money managers, who fulfill the stipulated objectives of the fund. The objectives could range from providing an income, making capital gains, or anywhere between.Fund managers are regulated by the Monetary authority of Singapore.

The money manager carefully chooses which assets to invest in to fulfill the funds’ objectives. The assets can range from bonds, commodities, stocks, or even real estate. They also change the fund to help optimize the return and capitalize on the market movements. This includes buying, selling, or switching assets.

How Does It Work?

The MAS regulates local and foreign unit funds offered to retail investors in Singapore as collective investment schemes. Investors pay a management fee for the fund based on the percentage of the assets they manage.

There are other investment products, such as Specified Investment Products (SIPs), where you will have to be certified to invest in them. You must check with your financial institution to see whether the product you want to invest in is a SIP.

Opportunities & Risks for Mutual Funds

Several perks come with investing in mutual funds. Some of them include:

  • A professional fund manager manages them
  • Access to diversified assets and markets
  • There are many funds to choose from based on your investment objective.

Mutual funds also come with their risks. They include:

  • Interest rate risk
  • Foreign currency risk
  • Liquidity risk
  • Counterparty risk
  • Market risk

Mutual Funds Vs. Unit Trusts Vs. ILPs Vs. ETFs

By definition, Mutual funds are very similar to unit trusts and exchange traded funds. They all have significant similarities. They are very distinct financial products with unique characteristics. Here is a table of how they compare

Mutual funds Unit trusts ILPs ETFs
Actively managed Not actively managed but professionally structured Actively managed It tracks an index but is not actively managed.
No end date Set investment period No specific end date No specific end date
Purchased from a company issuing shares Established under a trust deed Invest in it through sub-funds Traded on an exchange
High liquidity High liquidity Low-liquidity High liquidity
Priced once per day Also priced once per day Paid in monthly premiums The price fluctuates through the day.
Fees include the expense ratio and shareholder fees Fees include shareholder fees, management fees, and platform charges Insurance charges Fees include the commission, expense ratio, and spread.


This is a lot of information to grasp, but the main points are to understand the differences between mutual funds, unit trusts, ILPs, and ETFs.

There easiest way is to think of unit trusts as precursors of mutual funds. This is because one came from the other, but they share many similar characteristics. The main difference is that unit trusts have a specified end date while mutual funds can go as far as a sufficient investor wants them to go.

Mutual funds are actively managed while unit trusts are not. Unit trusts are structured by an investment professional who selects and allocates assets in the trust, after which it is left to run itself. Mutual funds, on the other hand, are actively managed throughout.

Now on to ETFs, the main difference is that they are not actively managed and are structured to track an index or a group of indices. This is why ETFs have the lowest fees compared to mutual funds. EFTs are also traded throughout the day, which causes a huge degree of volatility in their price. Mutual funds, on the other hand, are priced once a day.

Turning to ILPs, the most specific financial product of them all. ILPs or Investment-Linked Policies are policies that have investment components and life insurance coverage. The premium you pay is used to pay for units or the sub-funds of your choice.

ILPs are used to protect in case of death or, if included in the agreement, against permanent disability (TPD). The unit’s value solely depends on their price, which also depends on the sub-funds performance hence why they lack a guaranteed cash value.

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Top 10 Mutual Funds to Consider

Here is a list of the type of mutual funds in Singapore:

Type of Fund Mutual fund name
Equity fund LionGlobal Vietnam Fund
Equity fund Singlife MM Capital Growth
Equity fund UBS Global Emerging Markets Opportunity Fund SGD P
Fixed-income LionGlobal Short Duration Bond Fund Class A (SGD) (Dist)
Fixed-income JPMorgan Multi Income
Index fund SPDR STI ETF
Index fund Infinity Global Stock Index Fund SGD
Specialty fund Eastspring Investments Unit Trusts – Global Technology Fund
Specialty fund United Asia Pacific Real Estate Income Fund Class SGD Acc
Balanced fund AXA Asian Balanced Fund


There are many Mutual funds in Singapore and are made up of several fund types. The list we have placed above is a list of the most popular ones in the country.

Before deciding to invest in any fund, make sure you do your research. Learn about their investment approach and what asset they invest in to see if they meet your financial goals.

Key Questions to Ask Before Investing

All mutual funds differ in investment strategies, objectives, costs, and risks. It is therefore important to consider several aspects before you invest. Here are some of the things you must consider:

1. Are You Aware of Your Investment Objective?

Have a list of your goals and needs, risk profile, and personal circumstances. Be aware of your investment objectives and see if the fund will help you meet them.

2. Are You Okay with the Fund Manager?

Ensure that the fund manager has the necessary experience, resources, and skills to manage your investment. Check on their track record. However, it is important to keep in mind that their past performance is not an indication of their future performance.

3. Does the Mutual Fund Match Your Risk Profile and Investment Objective?

Before putting your money in a mutual fund, ensure that it matches your investment objective. Make sure you understand the risk of investing in the mutual to ensure that you are comfortable with it.

It is also important to ensure that the fund you invest in fits your portfolio over the risk-return profile and spreads your exposure to certain risks.

4. Will You Need Any Financial Advice?

If you need help to decide whether or not to invest in a fund, you will need the help of a financial adviser. If you are an experienced investor, you might want to consider buying the mutual funds from other channels that are less expensive. Such platforms include online trading platform and banks.

5. What Are the Charges of the Mutual Fund and Why?

It is important to know the fees related to the mutual fund of your choice. Ask for a fee structure that lists all the ongoing and one-time fees.

Enquire if these fees are negotiable or avoidable. You can also compare the fees from buying through different financial institutions or other platforms.

Understand how your financial adviser is paid and the kind of service expected from them.

6. How Does Your Mutual Fund of Choice Compare to Other Options?

It is important to find out the alternative investment products and how they compare to their competitors. Compare their risk returns and their features to choose the best for yourself.

Compare all their charges and fees you will need to settle for buying and holding the mutual fund. Different funds have different fees due to the different investment approaches and objectives.

stock market forex trading graph

How to Invest in Mutual Funds

In Singapore, you can invest in mutual funds through these three channels. They include:

Through an Online Brokerage Firm

Buying mutual funds through an online brokerage firm is one of the easiest ways to invest in funds. Most of the leading brokerage firms in Singapore offer mutual funds, but they are often listed as Unit trusts and ETFs.

Before you invest, be sure to familiarize yourself with the brokerage firm’s rules and regulations and not forget the fee structure.

Here are the steps to follow when investing in mutual funds through an online brokerage firm:

  • Sign-up for an online brokerage account
  • Deposit money into the account
  • Select the mutual fund of your choice
  • Buy the number of shares you wish to buy

After you are done with the process, you can check in once in a while to see how they find it performing. Depending on how the fund performs, you can decide to take the profit, purchase more shares, or cash out on your shares.

Through Your Local Bank

Most banks offer their customers investment services, and in most cases, mutual funds are part of the services.

To invest through the bank, you have to be happy with selecting mutual funds available at your bank. You will need to sign up for an investment account and start investing if you are.

However, before you start investing, you must meet the investment requirements such as timelines, budgets, and fees.

Through Investment-Linked Policy (ILP)

There are insurance companies that offer ILPs designed to cover both your investment and insurance needs as one product.

ILPs are paid with a sub-fund where they derive their cash value that is designed to accumulate over time. With an IPL, you need to check on the sub-fund attached to your policy to see if it is a mutual fund.

You can always ask your insurer to switch your sub-fund to a mutual fund to meet your investment goals. It is important to note that the insurance costs are always deducted from your premiums and the remainder invested in the sub-fund.

While ILPs are a way to invest in mutual funds, it is not the best way to invest in mutual funds. This is because ILPs have many restrictions, such as penalties for early withdrawals. The is also a high chance of you losing your paid-up premiums if you withdraw during the early years of your plan.

ILPs are designed as long-term investment products, and you should never decide on investing in them in a hurry.

Related Questions

Why Should I Invest in Mutual Funds?

Here are some of the reasons you should consider investing in mutual funds.

1. They are Convenient and Easy to Diversify Your Portfolio

If you are an investor looking for an easy and convenient way to diversify your portfolio, mutual funds are your best bet. This is mainly because there is a huge range of mutual funds available from different sectors and assets. This ensures that you are well hedged against market volatility.

Most large mutual funds have different bonds, stocks, and other assets in their fundholding and are designed to be well balanced. This ensures that investors achieve a well-diversified portfolio by buying one or two mutual funds.

2. Mutual Funds Have a High Degree of Liquidity

Other than the fact that they are easy to access, the mutual fund has high liquidity. Mutual funds are available in a number of online brokerages and local banks. It is possible to buy and sell mutual funds directly from them, which allows you to get rid of the third-party commissions.

Depending on your circumstances, you can also partially sell or completely sell your shares. You can also add to your investment if you want to. This is possible since mutual funds are always settled at the end of the day.

Mutual funds pool many investors together, which gives them the bargaining power and the ability to move huge securities together. The economies of scale move to the individual shareholder, who greatly benefits from the low buying prices of the securities.

3. Your Investment Is Managed by A Professional

Mutual funds are actively managed investments by investment professionals. This is an advantage for investors who do not have the time, confidence, or will to manage their investments.

The downside of this feature is that you will have to pay a management fee which will impact your profits.

What Are the Different Types of Mutual Funds?

1. Equity Funds

Equity funds are the most popular mutual funds types that heavily focus on equities, i.e., shares and stocks. There are different categories of companies that mutual funds can invest in, hence the sub-categories of mutual funds.

Here are some of the sub-categories of equity funds:

  • Investment approach
  • Size of the company
  • Territory

2. Fixed-Income Funds

These focus on supplying steady income for investors hence heavily focus on debt instruments such as cooperate bonds, government bonds, and other assets designed to furnish as set and have a predictable rate of returns.

Also known as bond funds, fixed-income funds are highly volatile, featuring uncertain returns. They also face the interest rate risk that might affect the borrower’s ability to pay back the debt.

3. Index Funds

Index funds as designed to replicate the results of major market indices such as the STI. They work with the theory that it is often hard to beat the market consistently. Therefore, it is easy to produce great results by tracking the performance of a collection of indices or an index.

Fund managers achieve this by building a portfolio with a similar allocation to the index.

4. Specialty Funds

These are funds designed to capture the value of a specific sector, such as real estate and technology. Specialty funds consist of shares of the best performers in a specific sector. They also cover mutual funds covering exotic assets such as wine or whisky, luxury goods, art, and collectibles.

5. Balanced Funds

Balanced funds are made up of assets across several asset classes. This allows the fund to be self-sufficient in hedging against market volatility. Its overall performance is expected to be flat and is best suited for investors seeking to preserve capital and value instead of growing their wealth.

What Is the Difference Between Unit Trusts and ILPs?

The main difference is that ILPs combine life the investment component and life insurance coverage. This means that your premiums to your life insurance are used to pay for units in the sub-funds of your choice. Some of the units are sold to pay for your insurance and other charges that may come up.

What Happens When a Fund Is Terminated?

If the fund manager decides to close the fund, they shall tell you how to redeem your investment, while some will make arrangements on how to transfer your funds to another fund.

A fund may be terminated when it becomes too small to be economically viable or when the fund manager ceases its operations.

Read more on best stocks to invest in Singapore


Mutual funds are a great investment product when diversifying your portfolio with a low-risk investment. The funds are actively managed by a fund manager whose work is to buy and sell assets to generate a high return for the pool of investors.

Key Takeaways

  • A fund manager actively manages mutual funds
  • They do not have a specific end date
  • Mutual funds are priced once per day

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