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Calculated Shard: 46 (from laksa185)

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curl -X POST \
  'http://laksa046.int.ahrefs:8124/' \
  -H 'Content-Type: text/plain' \
  -H 'X-ClickHouse-Database: crawler3' \
  -H 'Authorization: Basic YXBpOg==' \
  -d 'SELECT getAhrefsURLFromUnparsed(src_unparsed) AS found_url, ifNull(toUnixTimestamp(download_stamp), 0) AS crawl_time, ifNull(toUnixTimestamp(props_url_first_seen), 0) AS first_indexed_time, download_http_code AS http_code, src_unparsed AS src_unparsed, src_root_hash AS src_root_hash, history_drop_reason AS history_drop_reason, meta_title AS meta_title, meta_descriptions AS meta_descriptions, attrs_boilerpipe_text AS attrs_boilerpipe_text, attrs_markdown AS attrs_markdown, attrs_readable_markdown AS attrs_readable_markdown, meta_canonical AS meta_canonical FROM crawler3.page_info_local FINAL PREWHERE (src_root_hash, src_unparsed) IN ((getAhrefsRootHashFromUnparsed(getAhrefsUnparsedNoserviceFromURL(\'https://www.moneyowl.com.sg/articles/why-unit-trusts-and-not-etf/\')), getAhrefsUnparsedNoserviceFromURL(\'https://www.moneyowl.com.sg/articles/why-unit-trusts-and-not-etf/\'))) FORMAT JSONEachRow'

Response:

{"found_url":"https:\/\/www.moneyowl.com.sg\/articles\/why-unit-trusts-and-not-etf\/","crawl_time":1775626952,"first_indexed_time":1589100631,"http_code":200,"src_unparsed":"sg,com,moneyowl!www,\/articles\/why-unit-trusts-and-not-etf\/ s443","src_root_hash":"2024584272953185046","history_drop_reason":null,"meta_title":"Why Unit Trusts And Not ETF? | MoneyOwl","meta_descriptions":["Uncover the difference between Unit Trust vs ETF and here at Moneyowl, we encourage you to look at other perspectives for investment."],"attrs_boilerpipe_text":"Note: It was announced in November 2023 that MoneyOwl will be acquired by Temasek Trust to serve communities under a re-purposed model, and will move away from direct sale of financial products. The article is retained with original information relevant as at the date of the article only, and any mention of products or promotions is retained for reference purposes only. \n______________\nThe difference between Unit Trust vs ETF and why you should look at other perspectives for investment\nMoneyOwl\nbelieves in constructing\nlow-cost portfolios\nthat contain stocks and bonds worldwide. We use\nUnit Trusts\nto create these portfolios for our clients.\nSome of the readers may have heard of the negative reputation of Unit Trusts in Singapore as being an\nexpensive\ninvestment tool and\nshould be avoided\n.\nUnit Trust = Expensive, Lousy, Avoid at all cost\nConsider this, a cup of Starbucks Coffee is expensive. If someone were to say a cup is expensive just because a cup of Starbucks Coffee is expensive, you will think that it is silly because it is the coffee inside the cup that makes it expensive.\nCup = Unit Trusts, Starbucks Coffee = High-Cost Investment Strategies\nSimilarly, Unit Trusts are\njust tools\nto carry out investment strategies. They are expensive because they are most commonly used to implement high-cost investment strategies. Therefore, when looking at an investment tool, it is the investment strategy that should be looked at instead of the tool by itself.\nThere are Unit Trusts that are used to implement low-cost investment strategies which makes them low-cost Unit Trusts. MoneyOwl uses\nlow-cost Unit Trusts from\nDimensional Fund Advisors\nwhich align with our investment philosophy to create our low-cost portfolios.\nWhy not use low-cost ETFs?\nLet’s address this question by first introducing Exchange Traded Fund (ETF). ETFs, unlike Unit Trusts, have a good reputation as a cheap and good investment tool that everyone should invest in.\nETF = Cheap, Good, Must Have\nSimilar to a Unit Trust, an ETF is a tool that happens to be mainly used for carrying out low-cost investment strategies.\nMoneyOwl has considered both low costs Unit Trusts and ETFs that can execute our investment philosophy. These are the considerations taken that led to our final decision.\n1) Cost Aspects\nFirstly, there is the total expense ratio on a portfolio basis. The total expense ratio is the yearly fee that is paid to the companies that create the funds.\nFor\nMoneyOwl\n, the low-cost ETFs are approximately 0.1% cheaper than the low-cost unit trusts.\nWin – Low-Cost Passive ETF\nIt is in\nMoneyOwl’s\ninvestment philosophy to invest globally and many tax authorities around the world impose dividend taxes on foreign investors. Therefore, it is important for\nMoneyOwl\nto consider the impact of taxes on our investors.\nCost of tax = Tax Rate x Dividend Yield of Investment\nFor example:\nThe United States stock market makes up over 50% of the global stock market. The US Dividend Withholding Tax is a 30% tax rate on the dividends paid to foreign investors (Singapore).\nSPDR S&P500 ETF – Dividend Yield is 1.85%.\nCost of Tax for Singapore Investors = 30% x 1.85% = 0.55%\nFor MoneyOwl:\nFor\nMoneyOwl\n, the low-cost unit trusts offer lower tax costs for our clients than the low-cost ETFs.\nWin – Low-Cost Unit Trust\nTips: Remember to consider the cost of tax which is often hidden when you invest overseas. A low total expense ratio may not justify the high cost of tax that may be incurred.\nThe overall cost-savings for Unit Trusts are higher than ETFs for our clients.\n2) Share Ownership Aspect\nETF can only be bought and owned on a per-share basis. Hence, when investing in an ETF, there are often instances when your investment amount may not be able to purchase a full share of the ETF.\nConsider this, you have allocated a budget of $100 to buy soft drinks for a party. The soft drinks that you want to buy cost $1.50 per bottle. With your budget, you can only purchase 66 bottles of drinks and have $1 leftover. You are unable to use the $1 to buy 2\/3 bottle of the soft drink. This is exactly how it works for an ETF.\nMoneyOwl believes that the amount of money that you have set aside for investment, should be fully invested at all times. The cash that is not invested is an opportunity cost for you to grow your money. Thus, ETFs may prevent some clients from being fully invested.\nThere are platforms that allow users to purchase fractional ETF shares. However, there are some implications of such an arrangement. Using the same soft drink example, this means your $1 will buy 2\/3 of a bottle of a soft drink while another person will buy the other 1\/3. As a result,\nThere is unclear legal ownership of the shares.\nYour portion of an ETF share may be force-sold when another owner of the same ETF share is attempting to sell.\nMoneyOwl is not comfortable with such an approach.\nOn the other hand, Unit Trust allows investors to hold fractional units. This overcomes the issue of the opportunity cost of non-invested cash from using ETF and any unclear ownership issues with implementing fractional shares for ETF.\nNote: The advantage of fractional shares ownership in a Unit Trust benefits clients engaging in small regular monthly investments the greatest.\nWin – Unit Trust\nAdditional consideration – currency exposure of global bond funds:\nSpecifically, for global bond funds, MoneyOwl would like to select funds that are hedged* to Singapore Dollars. This is because the fluctuations of currency rates are larger than the potential gain in a bond fund and this means that an unhedged global bond fund will add unnecessary volatility to our portfolio. As for global equities, they should remain unhedged in terms of foreign currency, as currency exposure provides potential diversification benefits. This is in line with fund management best practices.\nConclusion: Unit Trust over ETF for\nMoneyOwl\nETFs are great but it is important to understand their limitation. At the moment, the low-cost Unit Trusts from\nDimensional Fund\nA\ndvisors\nare simply better tools than low-cost ETFs to execute MoneyOwl’s investment philosophy. As you are looking to invest,\nMoneyOwl\nencourages you to look at more perspectives other than Total Expense Ratio in making your decision as there may be hidden costs that make your investment more costly.\nClick here to find out more!\n*Currency hedging is the act of offsetting the movement between a pair of currency using financial instruments.","attrs_markdown":"[Skip to content](https:\/\/www.moneyowl.com.sg\/articles\/why-unit-trusts-and-not-etf\/#content)\n\n[![](https:\/\/www.moneyowl.com.sg\/wp-content\/uploads\/2024\/09\/cropped-cropped-cropped-MOLogo_Horizontal-7-2.png)](https:\/\/www.moneyowl.com.sg\/)\n\n- [Advice](https:\/\/www.moneyowl.com.sg\/articles\/why-unit-trusts-and-not-etf\/)\n  [![](https:\/\/www.moneyowl.com.sg\/wp-content\/uploads\/2025\/10\/iconOwlChecklist.svg)](https:\/\/www.moneyowl.com.sg\/owlchecklist\/)\n  \n  ### [OwlChecklist](https:\/\/www.moneyowl.com.sg\/owlchecklist\/)\n  \n  Essential tips to navigate major life stages\n  \n  [![](https:\/\/www.moneyowl.com.sg\/wp-content\/uploads\/2025\/10\/iconOwlInvest.svg)](https:\/\/www.moneyowl.com.sg\/owlinvest\/)\n  \n  ### [OwlInvest](https:\/\/www.moneyowl.com.sg\/owlinvest\/)\n  \n  Investment Solutions for your goals\n  \n  [![](https:\/\/www.moneyowl.com.sg\/wp-content\/uploads\/2025\/10\/iconOwlInsure.svg)](https:\/\/www.moneyowl.com.sg\/owlinsure\/)\n  \n  ### [OwlInsure](https:\/\/www.moneyowl.com.sg\/owlinsure\/)\n  \n  Insurance Solutions for your life stage\n  \n  [![](https:\/\/www.moneyowl.com.sg\/wp-content\/uploads\/2025\/10\/iconOwlRubrics.svg)](https:\/\/www.moneyowl.com.sg\/owlrubrics\/)\n  \n  ### [OwlRubrics](https:\/\/www.moneyowl.com.sg\/owlrubrics\/)\n  \n  Breaking down life’s financial curiosities\n  \n  [![](https:\/\/www.moneyowl.com.sg\/wp-content\/uploads\/2025\/10\/iconOwlStar.svg)](https:\/\/www.moneyowl.com.sg\/owlstar\/)\n  \n  ### [OwlStar](https:\/\/www.moneyowl.com.sg\/owlstar\/)\n  \n  First-of-its kind insurance plan rating & commentary\n  \n  [![](https:\/\/www.moneyowl.com.sg\/wp-content\/uploads\/2025\/10\/iconOwlPhil.svg)](https:\/\/www.moneyowl.com.sg\/e-books\/)\n  \n  ### [OwlPhilosophies](https:\/\/www.moneyowl.com.sg\/e-books\/)\n  \n  [![](https:\/\/www.moneyowl.com.sg\/wp-content\/uploads\/2025\/10\/iconOwlRubrics.svg)](https:\/\/www.moneyowl.com.sg\/owlrubrics\/)\n  \n  ### [OwlRubrics](https:\/\/www.moneyowl.com.sg\/owlrubrics\/)\n  \n  Breaking down life’s financial curiosities\n  \n  [![](https:\/\/www.moneyowl.com.sg\/wp-content\/uploads\/2025\/10\/iconOwlStar.svg)](https:\/\/www.moneyowl.com.sg\/owlstar\/)\n  \n  ### [OwlStar](https:\/\/www.moneyowl.com.sg\/owlstar\/)\n  \n  First-of-its kind insurance plan rating & commentary\n  \n  [![](https:\/\/www.moneyowl.com.sg\/wp-content\/uploads\/2025\/10\/iconOwlPhil.svg)](https:\/\/www.moneyowl.com.sg\/e-books\/)\n  \n  ### [OwlPhilosophies](https:\/\/www.moneyowl.com.sg\/e-books\/)\n  \n  Comprehensive guidance and principles\n- [Tools](https:\/\/www.moneyowl.com.sg\/articles\/why-unit-trusts-and-not-etf\/)\n  [Calculators](https:\/\/www.moneyowl.com.sg\/tools-calculators)\n  \n  ## Calculators\n  [![](https:\/\/www.moneyowl.com.sg\/wp-content\/uploads\/2025\/10\/Insurance-Calculator.svg)](https:\/\/www.moneyowl.com.sg\/tools-calculators\/insurance-calculator\/)\n  \n  ### [Insurance Calculator](https:\/\/www.moneyowl.com.sg\/tools-calculators\/insurance-calculator\/)\n  \n  Understand your needs. 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The article is retained with original information relevant as at the date of the article only, and any mention of products or promotions is retained for reference purposes only.*\n\n\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\n\n## The difference between Unit Trust vs ETF and why you should look at other perspectives for investment\n[MoneyOwl](https:\/\/www.dev.moneyowl.com.sg\/) believes in constructing **low-cost portfolios** that contain stocks and bonds worldwide. We use **Unit Trusts** to create these portfolios for our clients.\n\nSome of the readers may have heard of the negative reputation of Unit Trusts in Singapore as being an **expensive** investment tool and **should be avoided**.\n\n> *Unit Trust = Expensive, Lousy, Avoid at all cost*\n\nConsider this, a cup of Starbucks Coffee is expensive. If someone were to say a cup is expensive just because a cup of Starbucks Coffee is expensive, you will think that it is silly because it is the coffee inside the cup that makes it expensive.\n\nCup = Unit Trusts, Starbucks Coffee = High-Cost Investment Strategies\n\nSimilarly, Unit Trusts are **just tools** to carry out investment strategies. They are expensive because they are most commonly used to implement high-cost investment strategies. Therefore, when looking at an investment tool, it is the investment strategy that should be looked at instead of the tool by itself.\n\nThere are Unit Trusts that are used to implement low-cost investment strategies which makes them low-cost Unit Trusts. MoneyOwl uses **low-cost Unit Trusts from [Dimensional Fund Advisors](https:\/\/sg.dimensional.com\/)** which align with our investment philosophy to create our low-cost portfolios.\n\n## **Why not use low-cost ETFs?**\nLet’s address this question by first introducing Exchange Traded Fund (ETF). ETFs, unlike Unit Trusts, have a good reputation as a cheap and good investment tool that everyone should invest in.\n\n> *ETF = Cheap, Good, Must Have*\n\nSimilar to a Unit Trust, an ETF is a tool that happens to be mainly used for carrying out low-cost investment strategies.\n\n![](https:\/\/www.dev.moneyowl.com.sg\/wp-content\/uploads\/2022\/08\/Picture1-1024x178-1.jpg)\n\nMoneyOwl has considered both low costs Unit Trusts and ETFs that can execute our investment philosophy. These are the considerations taken that led to our final decision.\n\n### **1\\) Cost Aspects**\nFirstly, there is the total expense ratio on a portfolio basis. The total expense ratio is the yearly fee that is paid to the companies that create the funds.\n\n![](https:\/\/www.dev.moneyowl.com.sg\/wp-content\/uploads\/2022\/08\/Picture2-1024x146-1.jpg)\n\nFor [MoneyOwl](https:\/\/www.dev.moneyowl.com.sg\/), the low-cost ETFs are approximately 0.1% cheaper than the low-cost unit trusts.\n\n#### **Win – Low-Cost Passive ETF**\nIt is in [MoneyOwl’s](https:\/\/www.dev.moneyowl.com.sg\/) investment philosophy to invest globally and many tax authorities around the world impose dividend taxes on foreign investors. Therefore, it is important for [MoneyOwl](https:\/\/www.dev.moneyowl.com.sg\/) to consider the impact of taxes on our investors.\n\nCost of tax = Tax Rate x Dividend Yield of Investment\n\n***For example:***\n\nThe United States stock market makes up over 50% of the global stock market. The US Dividend Withholding Tax is a 30% tax rate on the dividends paid to foreign investors (Singapore).\n\nSPDR S\\&P500 ETF – Dividend Yield is 1.85%.\n\nCost of Tax for Singapore Investors = 30% x 1.85% = 0.55%\n\n### **For MoneyOwl:**\n![](https:\/\/www.dev.moneyowl.com.sg\/wp-content\/uploads\/2022\/08\/Picture3-1024x453-1.jpg)\n\nFor [MoneyOwl](https:\/\/www.dev.moneyowl.com.sg\/), the low-cost unit trusts offer lower tax costs for our clients than the low-cost ETFs.\n\n#### **Win – Low-Cost Unit Trust**\nTips: Remember to consider the cost of tax which is often hidden when you invest overseas. A low total expense ratio may not justify the high cost of tax that may be incurred.\n\n**The overall cost-savings for Unit Trusts are higher than ETFs for our clients.**\n\n### **2\\) Share Ownership Aspect**\nETF can only be bought and owned on a per-share basis. Hence, when investing in an ETF, there are often instances when your investment amount may not be able to purchase a full share of the ETF.\n\nConsider this, you have allocated a budget of \\$100 to buy soft drinks for a party. The soft drinks that you want to buy cost \\$1.50 per bottle. With your budget, you can only purchase 66 bottles of drinks and have \\$1 leftover. You are unable to use the \\$1 to buy 2\/3 bottle of the soft drink. This is exactly how it works for an ETF.\n\nMoneyOwl believes that the amount of money that you have set aside for investment, should be fully invested at all times. The cash that is not invested is an opportunity cost for you to grow your money. Thus, ETFs may prevent some clients from being fully invested.\n\nThere are platforms that allow users to purchase fractional ETF shares. However, there are some implications of such an arrangement. Using the same soft drink example, this means your \\$1 will buy 2\/3 of a bottle of a soft drink while another person will buy the other 1\/3. As a result,\n\n1. There is unclear legal ownership of the shares.\n2. Your portion of an ETF share may be force-sold when another owner of the same ETF share is attempting to sell.\n\nMoneyOwl is not comfortable with such an approach.\n\nOn the other hand, Unit Trust allows investors to hold fractional units. This overcomes the issue of the opportunity cost of non-invested cash from using ETF and any unclear ownership issues with implementing fractional shares for ETF.\n\nNote: The advantage of fractional shares ownership in a Unit Trust benefits clients engaging in small regular monthly investments the greatest.\n\n#### **Win – Unit Trust**\n**Additional consideration – currency exposure of global bond funds:**\n\nSpecifically, for global bond funds, MoneyOwl would like to select funds that are hedged\\* to Singapore Dollars. This is because the fluctuations of currency rates are larger than the potential gain in a bond fund and this means that an unhedged global bond fund will add unnecessary volatility to our portfolio. As for global equities, they should remain unhedged in terms of foreign currency, as currency exposure provides potential diversification benefits. This is in line with fund management best practices.\n***\n## **Conclusion: Unit Trust over ETF for [MoneyOwl](https:\/\/www.dev.moneyowl.com.sg\/)**\nETFs are great but it is important to understand their limitation. At the moment, the low-cost Unit Trusts from [Dimensional Fund](https:\/\/sg.dimensional.com\/) [A](https:\/\/sg.dimensional.com\/)[dvisors](https:\/\/sg.dimensional.com\/) are simply better tools than low-cost ETFs to execute MoneyOwl’s investment philosophy. As you are looking to invest, [MoneyOwl](https:\/\/www.dev.moneyowl.com.sg\/) encourages you to look at more perspectives other than Total Expense Ratio in making your decision as there may be hidden costs that make your investment more costly.\n\n[Click here to find out more\\!](https:\/\/www.moneyowl.com.sg\/invest\/)\n\n*\\*Currency hedging is the act of offsetting the movement between a pair of currency using financial instruments.*\n\nTags\n\n[investment in singapore](https:\/\/www.moneyowl.com.sg\/articles\/tag\/investment-in-singapore\/)  [investment lessons](https:\/\/www.moneyowl.com.sg\/articles\/tag\/investment-lessons\/)  [investments](https:\/\/www.moneyowl.com.sg\/articles\/tag\/investments\/)  [Unit Trust vs ETF](https:\/\/www.moneyowl.com.sg\/articles\/tag\/unit-trust-vs-etf\/)\n\n# Learn More\n![term life insurance comparison](https:\/\/www.moneyowl.com.sg\/wp-content\/uploads\/2022\/11\/10Nov2022-Term-Insurance-Blog-Banner_Term-Life.jpg)\n\n31 Jan 2026\n\nInsurance\n\n[Compare Term Life Insurance in Singapore: Term Life Insurance](https:\/\/www.moneyowl.com.sg\/articles\/singapores-term-life-insurance-comparison-table\/)\n\nGet the best rates for your term life insurance coverage with our comparison tables.\n\n[Read More](https:\/\/www.moneyowl.com.sg\/articles\/singapores-term-life-insurance-comparison-table\/)\n\n![term life insurance and critical illness comparison](https:\/\/www.moneyowl.com.sg\/wp-content\/uploads\/2022\/11\/10Nov2022-Term-Insurance-Blog-Banner_Term-Life-Plus-CI.jpg)\n\n31 Jan 2026\n\nInsurance\n\n[Compare Term Life Insurance in Singapore: Term Life with Critical Illness](https:\/\/www.moneyowl.com.sg\/articles\/singapores-term-life-plus-critical-illness-comparison-table\/)\n\nGet the best rates for your term life insurance with critical illness plan with our comparison tables.\n\n[Read More](https:\/\/www.moneyowl.com.sg\/articles\/singapores-term-life-plus-critical-illness-comparison-table\/)\n\n![](https:\/\/www.moneyowl.com.sg\/wp-content\/uploads\/2025\/11\/ISP_flowchart.jpeg)\n\n28 Nov 2025\n\nInsurance\n\n[On Integrated Shield Plan Rider Changes](https:\/\/www.moneyowl.com.sg\/articles\/on-integrated-shield-plan-rider-changes\/)\n\nWe need to revisit our mindset on insurance\n\n[Read More](https:\/\/www.moneyowl.com.sg\/articles\/on-integrated-shield-plan-rider-changes\/)\n\n[Learn More](https:\/\/www.moneyowl.com.sg\/articles\/)\n\n### Subscribe to our OwlHoots newsletter\nSign up for our newsletter and never miss out on the latest financial news and updates\\!\n\nAdvice\n\n- [OwlChecklists](https:\/\/www.moneyowl.com.sg\/owlchecklist\/)\n- [OwlStar](https:\/\/www.moneyowl.com.sg\/owlstar\/)\n- [OwlInsure](https:\/\/www.moneyowl.com.sg\/owlinsure)\n- [OwlInvest](https:\/\/www.moneyowl.com.sg\/owlinvest\/)\n- 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Us](https:\/\/www.moneyowl.com.sg\/contact-us\/)\n\n![](https:\/\/www.moneyowl.com.sg\/wp-content\/uploads\/2025\/12\/IB_2025-2026_TB_MoneyOwl_CETI-07-1024x483.png)\n\nMoneyOwl Pte Ltd (UEN. 201820691C) is a financial adviser and fund management company licensed by MAS.\n\n### 28 Orchard Road, Temasek Shophouse, \\#01-05, Singapore 238832\n\nConnect With Us\n\n[Whatsapp](https:\/\/whatsapp.com\/channel\/0029VbBDiYz6RGJFnuoYYF15)\n\n© 2024 MoneyOwl Pte Ltd. All Rights Reserved.\n\n- [Terms of Use](https:\/\/www.moneyowl.com.sg\/terms-of-use\/)\n- [Terms and Conditions & Privacy Policy](https:\/\/www.moneyowl.com.sg\/terms-and-conditions-privacy-policy\/)\n- [Security Policy](https:\/\/www.moneyowl.com.sg\/security-policy\/)\n- [Disclosure](https:\/\/www.moneyowl.com.sg\/disclosure\/)\n- [Fair Dealing](https:\/\/www.moneyowl.com.sg\/fair-dealing\/)\n\n- [Terms of Use](https:\/\/www.moneyowl.com.sg\/terms-of-use\/)\n- [Terms and Conditions & Privacy Policy](https:\/\/www.moneyowl.com.sg\/terms-and-conditions-privacy-policy\/)\n- [Security Policy](https:\/\/www.moneyowl.com.sg\/security-policy\/)\n- [Disclosure](https:\/\/www.moneyowl.com.sg\/disclosure\/)\n- [Fair Dealing](https:\/\/www.moneyowl.com.sg\/fair-dealing\/)\n\n- [Terms of Use](https:\/\/www.moneyowl.com.sg\/terms-of-use\/)\n- [Terms and Conditions & Privacy Policy](https:\/\/www.moneyowl.com.sg\/terms-and-conditions-privacy-policy\/)\n\n- [Terms of Use](https:\/\/www.moneyowl.com.sg\/terms-of-use\/)\n- [Terms and Conditions & Privacy Policy](https:\/\/www.moneyowl.com.sg\/terms-and-conditions-privacy-policy\/)\n- [Security Policy](https:\/\/www.moneyowl.com.sg\/security-policy\/)\n\n- [Disclosure](https:\/\/www.moneyowl.com.sg\/disclosure\/)\n- [Fair Dealing](https:\/\/www.moneyowl.com.sg\/fair-dealing\/)\n\n- [Security Policy](https:\/\/www.moneyowl.com.sg\/security-policy\/)\n- [Disclosure](https:\/\/www.moneyowl.com.sg\/disclosure\/)\n- [Fair Dealing](https:\/\/www.moneyowl.com.sg\/fair-dealing\/)","attrs_readable_markdown":"*Note: It was announced in November 2023 that MoneyOwl will be acquired by Temasek Trust to serve communities under a re-purposed model, and will move away from direct sale of financial products. The article is retained with original information relevant as at the date of the article only, and any mention of products or promotions is retained for reference purposes only.*\n\n\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\\_\n\n## The difference between Unit Trust vs ETF and why you should look at other perspectives for investment\n[MoneyOwl](https:\/\/www.dev.moneyowl.com.sg\/) believes in constructing **low-cost portfolios** that contain stocks and bonds worldwide. We use **Unit Trusts** to create these portfolios for our clients.\n\nSome of the readers may have heard of the negative reputation of Unit Trusts in Singapore as being an **expensive** investment tool and **should be avoided**.\n\n> *Unit Trust = Expensive, Lousy, Avoid at all cost*\n\nConsider this, a cup of Starbucks Coffee is expensive. If someone were to say a cup is expensive just because a cup of Starbucks Coffee is expensive, you will think that it is silly because it is the coffee inside the cup that makes it expensive.\n\nCup = Unit Trusts, Starbucks Coffee = High-Cost Investment Strategies\n\nSimilarly, Unit Trusts are **just tools** to carry out investment strategies. They are expensive because they are most commonly used to implement high-cost investment strategies. Therefore, when looking at an investment tool, it is the investment strategy that should be looked at instead of the tool by itself.\n\nThere are Unit Trusts that are used to implement low-cost investment strategies which makes them low-cost Unit Trusts. MoneyOwl uses **low-cost Unit Trusts from [Dimensional Fund Advisors](https:\/\/sg.dimensional.com\/)** which align with our investment philosophy to create our low-cost portfolios.\n\n## **Why not use low-cost ETFs?**\nLet’s address this question by first introducing Exchange Traded Fund (ETF). ETFs, unlike Unit Trusts, have a good reputation as a cheap and good investment tool that everyone should invest in.\n\n> *ETF = Cheap, Good, Must Have*\n\nSimilar to a Unit Trust, an ETF is a tool that happens to be mainly used for carrying out low-cost investment strategies.\n\n![](https:\/\/www.dev.moneyowl.com.sg\/wp-content\/uploads\/2022\/08\/Picture1-1024x178-1.jpg)\n\nMoneyOwl has considered both low costs Unit Trusts and ETFs that can execute our investment philosophy. These are the considerations taken that led to our final decision.\n\n### **1\\) Cost Aspects**\nFirstly, there is the total expense ratio on a portfolio basis. The total expense ratio is the yearly fee that is paid to the companies that create the funds.\n\n![](https:\/\/www.dev.moneyowl.com.sg\/wp-content\/uploads\/2022\/08\/Picture2-1024x146-1.jpg)\n\nFor [MoneyOwl](https:\/\/www.dev.moneyowl.com.sg\/), the low-cost ETFs are approximately 0.1% cheaper than the low-cost unit trusts.\n\n#### **Win – Low-Cost Passive ETF**\nIt is in [MoneyOwl’s](https:\/\/www.dev.moneyowl.com.sg\/) investment philosophy to invest globally and many tax authorities around the world impose dividend taxes on foreign investors. Therefore, it is important for [MoneyOwl](https:\/\/www.dev.moneyowl.com.sg\/) to consider the impact of taxes on our investors.\n\nCost of tax = Tax Rate x Dividend Yield of Investment\n\n***For example:***\n\nThe United States stock market makes up over 50% of the global stock market. The US Dividend Withholding Tax is a 30% tax rate on the dividends paid to foreign investors (Singapore).\n\nSPDR S\\&P500 ETF – Dividend Yield is 1.85%.\n\nCost of Tax for Singapore Investors = 30% x 1.85% = 0.55%\n\n### **For MoneyOwl:**\n![](https:\/\/www.dev.moneyowl.com.sg\/wp-content\/uploads\/2022\/08\/Picture3-1024x453-1.jpg)\n\nFor [MoneyOwl](https:\/\/www.dev.moneyowl.com.sg\/), the low-cost unit trusts offer lower tax costs for our clients than the low-cost ETFs.\n\n#### **Win – Low-Cost Unit Trust**\nTips: Remember to consider the cost of tax which is often hidden when you invest overseas. A low total expense ratio may not justify the high cost of tax that may be incurred.\n\n**The overall cost-savings for Unit Trusts are higher than ETFs for our clients.**\n\n### **2\\) Share Ownership Aspect**\nETF can only be bought and owned on a per-share basis. Hence, when investing in an ETF, there are often instances when your investment amount may not be able to purchase a full share of the ETF.\n\nConsider this, you have allocated a budget of \\$100 to buy soft drinks for a party. The soft drinks that you want to buy cost \\$1.50 per bottle. With your budget, you can only purchase 66 bottles of drinks and have \\$1 leftover. You are unable to use the \\$1 to buy 2\/3 bottle of the soft drink. This is exactly how it works for an ETF.\n\nMoneyOwl believes that the amount of money that you have set aside for investment, should be fully invested at all times. The cash that is not invested is an opportunity cost for you to grow your money. Thus, ETFs may prevent some clients from being fully invested.\n\nThere are platforms that allow users to purchase fractional ETF shares. However, there are some implications of such an arrangement. Using the same soft drink example, this means your \\$1 will buy 2\/3 of a bottle of a soft drink while another person will buy the other 1\/3. As a result,\n\n1. There is unclear legal ownership of the shares.\n2. Your portion of an ETF share may be force-sold when another owner of the same ETF share is attempting to sell.\n\nMoneyOwl is not comfortable with such an approach.\n\nOn the other hand, Unit Trust allows investors to hold fractional units. This overcomes the issue of the opportunity cost of non-invested cash from using ETF and any unclear ownership issues with implementing fractional shares for ETF.\n\nNote: The advantage of fractional shares ownership in a Unit Trust benefits clients engaging in small regular monthly investments the greatest.\n\n#### **Win – Unit Trust**\n**Additional consideration – currency exposure of global bond funds:**\n\nSpecifically, for global bond funds, MoneyOwl would like to select funds that are hedged\\* to Singapore Dollars. This is because the fluctuations of currency rates are larger than the potential gain in a bond fund and this means that an unhedged global bond fund will add unnecessary volatility to our portfolio. As for global equities, they should remain unhedged in terms of foreign currency, as currency exposure provides potential diversification benefits. This is in line with fund management best practices.\n***\n## **Conclusion: Unit Trust over ETF for [MoneyOwl](https:\/\/www.dev.moneyowl.com.sg\/)**\nETFs are great but it is important to understand their limitation. At the moment, the low-cost Unit Trusts from [Dimensional Fund](https:\/\/sg.dimensional.com\/) [A](https:\/\/sg.dimensional.com\/)[dvisors](https:\/\/sg.dimensional.com\/) are simply better tools than low-cost ETFs to execute MoneyOwl’s investment philosophy. As you are looking to invest, [MoneyOwl](https:\/\/www.dev.moneyowl.com.sg\/) encourages you to look at more perspectives other than Total Expense Ratio in making your decision as there may be hidden costs that make your investment more costly.\n\n[Click here to find out more\\!](https:\/\/www.moneyowl.com.sg\/invest\/)\n\n*\\*Currency hedging is the act of offsetting the movement between a pair of currency using financial instruments.*","meta_canonical":"sg,com,moneyowl!dev,www,\/articles\/why-unit-trusts-and-not-etf\/ s443"}

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Meta Title	Why Unit Trusts And Not ETF? \| MoneyOwl
Meta Description	Uncover the difference between Unit Trust vs ETF and here at Moneyowl, we encourage you to look at other perspectives for investment.
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Boilerpipe Text	Note: It was announced in November 2023 that MoneyOwl will be acquired by Temasek Trust to serve communities under a re-purposed model, and will move away from direct sale of financial products. The article is retained with original information relevant as at the date of the article only, and any mention of products or promotions is retained for reference purposes only. ______________ The difference between Unit Trust vs ETF and why you should look at other perspectives for investment MoneyOwl believes in constructing low-cost portfolios that contain stocks and bonds worldwide. We use Unit Trusts to create these portfolios for our clients. Some of the readers may have heard of the negative reputation of Unit Trusts in Singapore as being an expensive investment tool and should be avoided . Unit Trust = Expensive, Lousy, Avoid at all cost Consider this, a cup of Starbucks Coffee is expensive. If someone were to say a cup is expensive just because a cup of Starbucks Coffee is expensive, you will think that it is silly because it is the coffee inside the cup that makes it expensive. Cup = Unit Trusts, Starbucks Coffee = High-Cost Investment Strategies Similarly, Unit Trusts are just tools to carry out investment strategies. They are expensive because they are most commonly used to implement high-cost investment strategies. Therefore, when looking at an investment tool, it is the investment strategy that should be looked at instead of the tool by itself. There are Unit Trusts that are used to implement low-cost investment strategies which makes them low-cost Unit Trusts. MoneyOwl uses low-cost Unit Trusts from Dimensional Fund Advisors which align with our investment philosophy to create our low-cost portfolios. Why not use low-cost ETFs? Let’s address this question by first introducing Exchange Traded Fund (ETF). ETFs, unlike Unit Trusts, have a good reputation as a cheap and good investment tool that everyone should invest in. ETF = Cheap, Good, Must Have Similar to a Unit Trust, an ETF is a tool that happens to be mainly used for carrying out low-cost investment strategies. MoneyOwl has considered both low costs Unit Trusts and ETFs that can execute our investment philosophy. These are the considerations taken that led to our final decision. 1) Cost Aspects Firstly, there is the total expense ratio on a portfolio basis. The total expense ratio is the yearly fee that is paid to the companies that create the funds. For MoneyOwl , the low-cost ETFs are approximately 0.1% cheaper than the low-cost unit trusts. Win – Low-Cost Passive ETF It is in MoneyOwl’s investment philosophy to invest globally and many tax authorities around the world impose dividend taxes on foreign investors. Therefore, it is important for MoneyOwl to consider the impact of taxes on our investors. Cost of tax = Tax Rate x Dividend Yield of Investment For example: The United States stock market makes up over 50% of the global stock market. The US Dividend Withholding Tax is a 30% tax rate on the dividends paid to foreign investors (Singapore). SPDR S&P500 ETF – Dividend Yield is 1.85%. Cost of Tax for Singapore Investors = 30% x 1.85% = 0.55% For MoneyOwl: For MoneyOwl , the low-cost unit trusts offer lower tax costs for our clients than the low-cost ETFs. Win – Low-Cost Unit Trust Tips: Remember to consider the cost of tax which is often hidden when you invest overseas. A low total expense ratio may not justify the high cost of tax that may be incurred. The overall cost-savings for Unit Trusts are higher than ETFs for our clients. 2) Share Ownership Aspect ETF can only be bought and owned on a per-share basis. Hence, when investing in an ETF, there are often instances when your investment amount may not be able to purchase a full share of the ETF. Consider this, you have allocated a budget of $100 to buy soft drinks for a party. The soft drinks that you want to buy cost $1.50 per bottle. With your budget, you can only purchase 66 bottles of drinks and have $1 leftover. You are unable to use the $1 to buy 2/3 bottle of the soft drink. This is exactly how it works for an ETF. MoneyOwl believes that the amount of money that you have set aside for investment, should be fully invested at all times. The cash that is not invested is an opportunity cost for you to grow your money. Thus, ETFs may prevent some clients from being fully invested. There are platforms that allow users to purchase fractional ETF shares. However, there are some implications of such an arrangement. Using the same soft drink example, this means your $1 will buy 2/3 of a bottle of a soft drink while another person will buy the other 1/3. As a result, There is unclear legal ownership of the shares. Your portion of an ETF share may be force-sold when another owner of the same ETF share is attempting to sell. MoneyOwl is not comfortable with such an approach. On the other hand, Unit Trust allows investors to hold fractional units. This overcomes the issue of the opportunity cost of non-invested cash from using ETF and any unclear ownership issues with implementing fractional shares for ETF. Note: The advantage of fractional shares ownership in a Unit Trust benefits clients engaging in small regular monthly investments the greatest. Win – Unit Trust Additional consideration – currency exposure of global bond funds: Specifically, for global bond funds, MoneyOwl would like to select funds that are hedged* to Singapore Dollars. This is because the fluctuations of currency rates are larger than the potential gain in a bond fund and this means that an unhedged global bond fund will add unnecessary volatility to our portfolio. As for global equities, they should remain unhedged in terms of foreign currency, as currency exposure provides potential diversification benefits. This is in line with fund management best practices. Conclusion: Unit Trust over ETF for MoneyOwl ETFs are great but it is important to understand their limitation. At the moment, the low-cost Unit Trusts from Dimensional Fund A dvisors are simply better tools than low-cost ETFs to execute MoneyOwl’s investment philosophy. As you are looking to invest, MoneyOwl encourages you to look at more perspectives other than Total Expense Ratio in making your decision as there may be hidden costs that make your investment more costly. Click here to find out more! *Currency hedging is the act of offsetting the movement between a pair of currency using financial instruments.
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Uncover the difference between Unit Trust vs ETF and here at Moneyowl, we encourage you to look at other perspectives for investment. 23 Apr 2019 ![Unit Trust vs ETF](https://www.moneyowl.com.sg/wp-content/uploads/2022/07/CUSTOM-STATIONARY-1.png) Share this Note: It was announced in November 2023 that MoneyOwl will be acquired by Temasek Trust to serve communities under a re-purposed model, and will move away from direct sale of financial products. The article is retained with original information relevant as at the date of the article only, and any mention of products or promotions is retained for reference purposes only. \_\_\_\_\_\_\_\_\_\_\_\_\_\_ ## The difference between Unit Trust vs ETF and why you should look at other perspectives for investment [MoneyOwl](https://www.dev.moneyowl.com.sg/) believes in constructing low-cost portfolios that contain stocks and bonds worldwide. We use Unit Trusts to create these portfolios for our clients. Some of the readers may have heard of the negative reputation of Unit Trusts in Singapore as being an expensive investment tool and should be avoided. > Unit Trust = Expensive, Lousy, Avoid at all cost Consider this, a cup of Starbucks Coffee is expensive. If someone were to say a cup is expensive just because a cup of Starbucks Coffee is expensive, you will think that it is silly because it is the coffee inside the cup that makes it expensive. Cup = Unit Trusts, Starbucks Coffee = High-Cost Investment Strategies Similarly, Unit Trusts are just tools to carry out investment strategies. They are expensive because they are most commonly used to implement high-cost investment strategies. Therefore, when looking at an investment tool, it is the investment strategy that should be looked at instead of the tool by itself. There are Unit Trusts that are used to implement low-cost investment strategies which makes them low-cost Unit Trusts. MoneyOwl uses low-cost Unit Trusts from [Dimensional Fund Advisors](https://sg.dimensional.com/) which align with our investment philosophy to create our low-cost portfolios. ## Why not use low-cost ETFs? Let’s address this question by first introducing Exchange Traded Fund (ETF). ETFs, unlike Unit Trusts, have a good reputation as a cheap and good investment tool that everyone should invest in. > ETF = Cheap, Good, Must Have Similar to a Unit Trust, an ETF is a tool that happens to be mainly used for carrying out low-cost investment strategies. ![](https://www.dev.moneyowl.com.sg/wp-content/uploads/2022/08/Picture1-1024x178-1.jpg) MoneyOwl has considered both low costs Unit Trusts and ETFs that can execute our investment philosophy. These are the considerations taken that led to our final decision. ### 1\) Cost Aspects Firstly, there is the total expense ratio on a portfolio basis. The total expense ratio is the yearly fee that is paid to the companies that create the funds. ![](https://www.dev.moneyowl.com.sg/wp-content/uploads/2022/08/Picture2-1024x146-1.jpg) For [MoneyOwl](https://www.dev.moneyowl.com.sg/), the low-cost ETFs are approximately 0.1% cheaper than the low-cost unit trusts. #### Win – Low-Cost Passive ETF It is in [MoneyOwl’s](https://www.dev.moneyowl.com.sg/) investment philosophy to invest globally and many tax authorities around the world impose dividend taxes on foreign investors. Therefore, it is important for [MoneyOwl](https://www.dev.moneyowl.com.sg/) to consider the impact of taxes on our investors. Cost of tax = Tax Rate x Dividend Yield of Investment *For example:* The United States stock market makes up over 50% of the global stock market. The US Dividend Withholding Tax is a 30% tax rate on the dividends paid to foreign investors (Singapore). SPDR S\&P500 ETF – Dividend Yield is 1.85%. Cost of Tax for Singapore Investors = 30% x 1.85% = 0.55% ### For MoneyOwl: ![](https://www.dev.moneyowl.com.sg/wp-content/uploads/2022/08/Picture3-1024x453-1.jpg) For [MoneyOwl](https://www.dev.moneyowl.com.sg/), the low-cost unit trusts offer lower tax costs for our clients than the low-cost ETFs. #### Win – Low-Cost Unit Trust Tips: Remember to consider the cost of tax which is often hidden when you invest overseas. A low total expense ratio may not justify the high cost of tax that may be incurred. The overall cost-savings for Unit Trusts are higher than ETFs for our clients. ### 2\) Share Ownership Aspect ETF can only be bought and owned on a per-share basis. Hence, when investing in an ETF, there are often instances when your investment amount may not be able to purchase a full share of the ETF. Consider this, you have allocated a budget of \$100 to buy soft drinks for a party. The soft drinks that you want to buy cost \$1.50 per bottle. With your budget, you can only purchase 66 bottles of drinks and have \$1 leftover. You are unable to use the \$1 to buy 2/3 bottle of the soft drink. This is exactly how it works for an ETF. MoneyOwl believes that the amount of money that you have set aside for investment, should be fully invested at all times. The cash that is not invested is an opportunity cost for you to grow your money. Thus, ETFs may prevent some clients from being fully invested. There are platforms that allow users to purchase fractional ETF shares. However, there are some implications of such an arrangement. Using the same soft drink example, this means your \$1 will buy 2/3 of a bottle of a soft drink while another person will buy the other 1/3. As a result, 1. There is unclear legal ownership of the shares. 2. Your portion of an ETF share may be force-sold when another owner of the same ETF share is attempting to sell. MoneyOwl is not comfortable with such an approach. On the other hand, Unit Trust allows investors to hold fractional units. This overcomes the issue of the opportunity cost of non-invested cash from using ETF and any unclear ownership issues with implementing fractional shares for ETF. Note: The advantage of fractional shares ownership in a Unit Trust benefits clients engaging in small regular monthly investments the greatest. #### Win – Unit Trust Additional consideration – currency exposure of global bond funds: Specifically, for global bond funds, MoneyOwl would like to select funds that are hedged\* to Singapore Dollars. This is because the fluctuations of currency rates are larger than the potential gain in a bond fund and this means that an unhedged global bond fund will add unnecessary volatility to our portfolio. As for global equities, they should remain unhedged in terms of foreign currency, as currency exposure provides potential diversification benefits. This is in line with fund management best practices. * ## Conclusion: Unit Trust over ETF for [MoneyOwl](https://www.dev.moneyowl.com.sg/)** ETFs are great but it is important to understand their limitation. At the moment, the low-cost Unit Trusts from [Dimensional Fund](https://sg.dimensional.com/) [A](https://sg.dimensional.com/)[dvisors](https://sg.dimensional.com/) are simply better tools than low-cost ETFs to execute MoneyOwl’s investment philosophy. As you are looking to invest, [MoneyOwl](https://www.dev.moneyowl.com.sg/) encourages you to look at more perspectives other than Total Expense Ratio in making your decision as there may be hidden costs that make your investment more costly. [Click here to find out more\!](https://www.moneyowl.com.sg/invest/) \Currency hedging is the act of offsetting the movement between a pair of currency using financial instruments.* Tags [investment in singapore](https://www.moneyowl.com.sg/articles/tag/investment-in-singapore/) [investment lessons](https://www.moneyowl.com.sg/articles/tag/investment-lessons/) [investments](https://www.moneyowl.com.sg/articles/tag/investments/) [Unit Trust vs ETF](https://www.moneyowl.com.sg/articles/tag/unit-trust-vs-etf/) # Learn More ![term life insurance comparison](https://www.moneyowl.com.sg/wp-content/uploads/2022/11/10Nov2022-Term-Insurance-Blog-Banner_Term-Life.jpg) 31 Jan 2026 Insurance [Compare Term Life Insurance in Singapore: Term Life Insurance](https://www.moneyowl.com.sg/articles/singapores-term-life-insurance-comparison-table/) Get the best rates for your term life insurance coverage with our comparison tables. 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[Read More](https://www.moneyowl.com.sg/articles/singapores-term-life-plus-critical-illness-comparison-table/) ![](https://www.moneyowl.com.sg/wp-content/uploads/2025/11/ISP_flowchart.jpeg) 28 Nov 2025 Insurance [On Integrated Shield Plan Rider Changes](https://www.moneyowl.com.sg/articles/on-integrated-shield-plan-rider-changes/) We need to revisit our mindset on insurance [Read More](https://www.moneyowl.com.sg/articles/on-integrated-shield-plan-rider-changes/) [Learn More](https://www.moneyowl.com.sg/articles/) ### Subscribe to our OwlHoots newsletter Sign up for our newsletter and never miss out on the latest financial news and updates\! 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Readable Markdown	Note: It was announced in November 2023 that MoneyOwl will be acquired by Temasek Trust to serve communities under a re-purposed model, and will move away from direct sale of financial products. The article is retained with original information relevant as at the date of the article only, and any mention of products or promotions is retained for reference purposes only. \_\_\_\_\_\_\_\_\_\_\_\_\_\_ ## The difference between Unit Trust vs ETF and why you should look at other perspectives for investment [MoneyOwl](https://www.dev.moneyowl.com.sg/) believes in constructing low-cost portfolios that contain stocks and bonds worldwide. We use Unit Trusts to create these portfolios for our clients. Some of the readers may have heard of the negative reputation of Unit Trusts in Singapore as being an expensive investment tool and should be avoided. > Unit Trust = Expensive, Lousy, Avoid at all cost Consider this, a cup of Starbucks Coffee is expensive. If someone were to say a cup is expensive just because a cup of Starbucks Coffee is expensive, you will think that it is silly because it is the coffee inside the cup that makes it expensive. Cup = Unit Trusts, Starbucks Coffee = High-Cost Investment Strategies Similarly, Unit Trusts are just tools to carry out investment strategies. They are expensive because they are most commonly used to implement high-cost investment strategies. Therefore, when looking at an investment tool, it is the investment strategy that should be looked at instead of the tool by itself. There are Unit Trusts that are used to implement low-cost investment strategies which makes them low-cost Unit Trusts. MoneyOwl uses low-cost Unit Trusts from [Dimensional Fund Advisors](https://sg.dimensional.com/) which align with our investment philosophy to create our low-cost portfolios. ## Why not use low-cost ETFs? Let’s address this question by first introducing Exchange Traded Fund (ETF). ETFs, unlike Unit Trusts, have a good reputation as a cheap and good investment tool that everyone should invest in. > ETF = Cheap, Good, Must Have Similar to a Unit Trust, an ETF is a tool that happens to be mainly used for carrying out low-cost investment strategies. ![](https://www.dev.moneyowl.com.sg/wp-content/uploads/2022/08/Picture1-1024x178-1.jpg) MoneyOwl has considered both low costs Unit Trusts and ETFs that can execute our investment philosophy. These are the considerations taken that led to our final decision. ### 1\) Cost Aspects Firstly, there is the total expense ratio on a portfolio basis. The total expense ratio is the yearly fee that is paid to the companies that create the funds. ![](https://www.dev.moneyowl.com.sg/wp-content/uploads/2022/08/Picture2-1024x146-1.jpg) For [MoneyOwl](https://www.dev.moneyowl.com.sg/), the low-cost ETFs are approximately 0.1% cheaper than the low-cost unit trusts. #### Win – Low-Cost Passive ETF It is in [MoneyOwl’s](https://www.dev.moneyowl.com.sg/) investment philosophy to invest globally and many tax authorities around the world impose dividend taxes on foreign investors. Therefore, it is important for [MoneyOwl](https://www.dev.moneyowl.com.sg/) to consider the impact of taxes on our investors. Cost of tax = Tax Rate x Dividend Yield of Investment *For example:* The United States stock market makes up over 50% of the global stock market. The US Dividend Withholding Tax is a 30% tax rate on the dividends paid to foreign investors (Singapore). SPDR S\&P500 ETF – Dividend Yield is 1.85%. Cost of Tax for Singapore Investors = 30% x 1.85% = 0.55% ### For MoneyOwl: ![](https://www.dev.moneyowl.com.sg/wp-content/uploads/2022/08/Picture3-1024x453-1.jpg) For [MoneyOwl](https://www.dev.moneyowl.com.sg/), the low-cost unit trusts offer lower tax costs for our clients than the low-cost ETFs. #### Win – Low-Cost Unit Trust Tips: Remember to consider the cost of tax which is often hidden when you invest overseas. A low total expense ratio may not justify the high cost of tax that may be incurred. The overall cost-savings for Unit Trusts are higher than ETFs for our clients. ### 2\) Share Ownership Aspect ETF can only be bought and owned on a per-share basis. Hence, when investing in an ETF, there are often instances when your investment amount may not be able to purchase a full share of the ETF. Consider this, you have allocated a budget of \$100 to buy soft drinks for a party. The soft drinks that you want to buy cost \$1.50 per bottle. With your budget, you can only purchase 66 bottles of drinks and have \$1 leftover. You are unable to use the \$1 to buy 2/3 bottle of the soft drink. This is exactly how it works for an ETF. MoneyOwl believes that the amount of money that you have set aside for investment, should be fully invested at all times. The cash that is not invested is an opportunity cost for you to grow your money. Thus, ETFs may prevent some clients from being fully invested. There are platforms that allow users to purchase fractional ETF shares. However, there are some implications of such an arrangement. Using the same soft drink example, this means your \$1 will buy 2/3 of a bottle of a soft drink while another person will buy the other 1/3. As a result, 1. There is unclear legal ownership of the shares. 2. Your portion of an ETF share may be force-sold when another owner of the same ETF share is attempting to sell. MoneyOwl is not comfortable with such an approach. On the other hand, Unit Trust allows investors to hold fractional units. This overcomes the issue of the opportunity cost of non-invested cash from using ETF and any unclear ownership issues with implementing fractional shares for ETF. Note: The advantage of fractional shares ownership in a Unit Trust benefits clients engaging in small regular monthly investments the greatest. #### Win – Unit Trust Additional consideration – currency exposure of global bond funds: Specifically, for global bond funds, MoneyOwl would like to select funds that are hedged\* to Singapore Dollars. This is because the fluctuations of currency rates are larger than the potential gain in a bond fund and this means that an unhedged global bond fund will add unnecessary volatility to our portfolio. As for global equities, they should remain unhedged in terms of foreign currency, as currency exposure provides potential diversification benefits. This is in line with fund management best practices. * ## Conclusion: Unit Trust over ETF for [MoneyOwl](https://www.dev.moneyowl.com.sg/)** ETFs are great but it is important to understand their limitation. At the moment, the low-cost Unit Trusts from [Dimensional Fund](https://sg.dimensional.com/) [A](https://sg.dimensional.com/)[dvisors](https://sg.dimensional.com/) are simply better tools than low-cost ETFs to execute MoneyOwl’s investment philosophy. As you are looking to invest, [MoneyOwl](https://www.dev.moneyowl.com.sg/) encourages you to look at more perspectives other than Total Expense Ratio in making your decision as there may be hidden costs that make your investment more costly. [Click here to find out more\!](https://www.moneyowl.com.sg/invest/) \Currency hedging is the act of offsetting the movement between a pair of currency using financial instruments.*
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