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ETF Investment Singapore: A Beginner's Guide to ETFs
If you're exploring ways to grow your wealth beyond savings accounts and fixed deposits, Exchange-Traded Funds (ETFs) are a great place to start. In Singapore, ETFs have become one of the most accessible investment tools. It's ideal for both new and seasoned investors alike who want low-cost diversification and transparent performance tracking.
What are ETFs?
An ETF (Exchange-Traded Fund) is a collection of assets—like stocks, bonds, REITs, unit trusts, mutual funds, or commodities—bundled into a single fund that trades on an exchange just like a stock.
However, instead of buying shares of individual companies, buying one single ETF instantly gains you exposure to a diversified basket of underlying securities tracking an entiremarket index or sector(e.g. the Straits Times Index, S&P 500, MSCI World Index).
For this reason, ETFs are popular because they combine the diversification of a unit trust with the liquidity of stocks. You can buy or sell ETF units anytime during market hours through your preferred brokerage platform.
Why invest in ETFs in Singapore?
- ✅ Diversification made simple: ETFs let you spread your investment across dozens (or even hundreds) of companies instantly.
- ✅ Passive management: Since ETFs track an index and are passively managed, it eliminates the need for frequent intervention by a fund manager. Hence, you retain more of the fund's dividend returns while enjoying lower management fees.
- ✅ Dividend income potential: ETFs often invest in dividend-paying stocks, so investors can receive regular distribution. These payouts can act as a source of passive income, appealing to those seeking steady returns without active monitoring.
- ✅ Transparency: ETF holdings are published regularly, so you always know what you're invested in.
- ✅ Flexibility: You can invest with as little as the price of one ETF unit.
- ✅ Accessibility: Many ETFs in Singapore are eligible under the Supplementary Retirement Scheme (SRS) and CPF Investment Scheme (CPF-IS).
Common types of ETFs in Singapore
ETF type | Main advantage | ETF name | Index it tracks | Suitable for |
Regional ETF | Geographic diversification | iShares MSCI Asia ex Japan ETF (AAXJ) | MSCI All Country Asia ex Japan Index | Beginner and core portfolios |
Equity ETF | Exposure to Singapore's top 30 blue-chip companies | SPDR STI ETF (ES3) | Straits Times Index | Local equity investors |
Bond ETF | Lower volatility and steady income from SG government | ABF Singapore Bond Index Fund | iBoxx ABF Singapore Bond Index | Income-focused investors |
Sectoral ETFs | Industry-specific exposure | Invesco QQQ / XLK | Nasdaq-100 (QQQ) / Technology Select Sector Index (XLK) | Growth investors |
Thematic ETF | Long-term trends | Lion-OCBC Securities Hang Seng Tech ETF | Major Hong Kong-listed tech stocks | Trend or ESG investors |
REIT ETFs | Diversified real estate holdings across Asia; dividend income | NikkoAM-StraitsTrading Asia ex Japan REIT ETF | FTSE EPRA Nareit Asia ex Japan REITs Index | Income-seeking investors |
Commodity ETF | Protect against inflation and diversify portfolio | SPDR Gold Shares (O87) | Spot gold price | Inflation hedgers and risk-averse investors |
These ETFs offer different exposure levels, from broad market indexes (like the STI) to specific themes such as technology or fixed income.
ETFs vs. other investment options
Investment type | Diversification | Liquidity | Fees / costs | Risk level |
ETF | High; tracks an index | High; trades all day | Low to moderate (brokerage + fund fee) | Medium; market-linked |
Unit Trust | Moderate to high | Lower; priced daily | Moderate to high (sales + management fee) | Medium; Market + manager risk |
REIT | Moderate; property portfolio | High; trades on SGX | Management fees + property costs | Property market exposure |
Mutual fund | Moderate to high | Lower; priced daily | Moderate to high | Medium; Market + holdings risk |
Stock | None; single company | High; trades all day | Low (brokerage) | High; company-specific |
Hence as seen from this table, ETFs offer the best balance for investors who want diversification and flexibility without paying high management fees.
Key ETF concepts
ETF structure | Description |
Structure | Pooled investment fund traded on stock exchanges like SGX or NYSE |
Assets held | Stocks, bonds, commodities, or a mix (depending on index) |
Management style | Passive, index-tracking |
Pricing | Market-based, fluctuates throughout trading hours |
Dividends | Either distributing or accumulating |
- Distributing vs. accumulating ETFs: Distributing ETFs pay dividends directly to investors; accumulating ETFs automatically reinvests them.
- Tracking error: Indicates how closely an ETF follows its benchmark index; the smaller the difference, the better the tracking.
- Expense ratio: Annual management fee expressed as a percentage of assets (usually below 1%).
- Custody type: ETFs listed can be held either through your CDP (for SGX-listed ETFs) or via custodian brokers (for overseas ETFs), depending on the platform you use.
Who should invest in ETFs?
ETFs are ideal for:
- Beginners wanting low-cost entry.
- Busy professionals seeking hands-off diversification.
- Long-term investors focusing on steady, index-linked growth.
If you prefer active management, unit trusts might suit you better. But if you value control, transparency, and cost-efficiency, ETFs are often the smarter choice.
READ:Beginner's Guide: Top 10 ETFs to Invest in Singapore
Types of ETFs Singaporeans Can Invest In
ETFs come in several categories, each providing a different way to diversify your portfolio. In Singapore, investors can access a mix of local and global ETFs through MAS-licensed brokers.
Platform | Key features | Commissions and other fees | MoneySmart exclusive promotion |
US, HK, and SG ETFs; real-time analytics; no minimum funding | US ETFs: 0.025% × Total Trade Amount (Min. USD0.50) SG ETFs: 0.025% × Trade Amount (Min. SGD 0.80) | Get up to S$260 Cash via PayNow OR Apple Airpods Pro 3 (worth S$349) OR LOJEL Voja Large Luggage (worth S$350) OR Apple Watch SE (worth S$349). Valid till 31 Jan 2026. T&Cs apply. | |
MAS-regulated; US, SG, and HK ETFs | US ETFs: US$0.01 per share (Min. US$0.99) SG ETFs: 0.06% of trade value | Get either up to S$120 upsized cash via PayNow or an Apple AirPods 4 when you open and fund a minimum of US$1,000 within the initial deposit + complete 1 new BUY trade. Valid till 8 Jan 2026. T&Cs apply. | |
SG & global ETFs; strong analytics; paper trading | US ETFs: S$0 lifetime commission + US$0.005/share or min. US$1 platform fee SG ETFs: S$0 for 1 year; thereafter 0.03% (min. S$0.99) | Get up to S$100 cash via PayNow or Sennheiser Accentum Wireless Headphones or S$130 GrabGift vouchers with eligibility criteria met. Valid till 31 Jan 2026. T&Cs apply. | |
Global ETF access, advanced tools | US ETFs: US$0 commission under IBKR Lite; US$0.0035–$0.005 per order (Min. US$1) under IBKR Pro SG ETFs: Market-based low commission | N/A | |
Maybank Securities Singapore | CDP-linked ETF trading on SGX | SG ETFs: ~0.18% per trade (min. S$25) | N/A |
5,500+ global ETFs and funds available | US ETFs: US$1 or 0.08% (whichever is greater) SG ETFs: S$3 or 0.08% (whichever is greater) | N/A | |
Access to regulated US and SG ETFs | US ETFs: Commission-free trades (subject to spread). SG ETFs: Standard CDP-linked rates (~0.08–0.18%). | N/A | |
Access to US, SG, and HK ETFs; fractional shares | US ETFs: US$0 commission for standard accounts, but US$0.88 per order platform fee applies SG ETFs: 0.02% (no minimum); platform fee waived for ETF RSPs | N/A |
All platforms above are MAS-licensed and provide secure access to ETF markets. Choose based on your preferred features—such as research tools, global market coverage, or CDP integration.
At a Glance: Different Types of ETF Categories
Regional ETFs
👍 Best for: Beginners and core portfolios
Regional ETFs track market indices from specific countries or regions. These are popular among Singapore investors who want exposure beyond the local market.
Region | ETF | Tracked index | Common holdings | Risk level | Available on |
Singapore (SGX) | SPDRF Straits Times Index ETF (SGX: ES3) | Straits Times Index (STI) | DBS, Singtel, CapitaLand | Low–moderate | Maybank Securities, Moomoo, Tiger Brokers |
United States | SPDR S&P 500 ETF Trust (NYSEARCA: SPY) | S&P 500 / Nasdaq 100 | Apple, Microsoft, Tesla | Moderate | Webull, Tiger Brokers, IBKR |
Asia-Pacific | iShares Asia ex-Japan ETF (SGX: AAXJ / HKEX: 3010) | MSCI Asia ex-Japan | Samsung, TSMC, Tencent | Moderate–high | Moomoo, Tiger Brokers, IBKR |
Global | iShares MSCI World ETF (URTH) | MSCI World / FTSE All‑World | Global blue chips | Moderate | Webull, Interactive Brokers |
Sectoral ETFs
👍 Best for: Growth investors
Sector ETFs focus on specific industries like technology, healthcare, or financials. They allow investors to capture thematic growth opportunities while spreading company‑specific risk.
Sector | Example ETF (Global) | Description | Platform access |
Technology | Invesco QQQ / XLK | Tracks major tech innovators | Webull, Tiger Brokers, IBKR |
Healthcare | XLV / iShares Global Healthcare | Covers pharma & biotech giants | Moomoo, IBKR |
Financials | XLF / SPDR Global Financial | Diversified across major banks | Webull, Tiger Brokers |
Sustainability | iShares ESG Aware MSCI World | Focuses on ESG leaders | Moomoo, IBKR |
💡 MoneySmart Tip: Sector ETFs are best for investors seeking targeted exposure, but their downside is their increased volatility. Consider using portfolio analysis tools on brokers like Moomoo or Webull to monitor weighting and risk.
Thematic ETFs
👍 Best for: Trend or ESG investors
Thematic ETFs capture long‑term megatrends such as clean energy, AI, or digital infrastructure. These funds can overlap sectors but follow enduring global narratives.
Theme | Example | Core focus | Recommended platforms |
Artificial intelligence | Global X Robotics & AI ETF | Automation, AI innovation | Webull, Tiger Brokers |
Clean energy | iShares Global Clean Energy ETF | Renewable power firms | Moomoo, IBKR |
Digital economy | ARK Next Generation Internet | Fintech, cloud, blockchain | Webull, Tiger Brokers |
Commodity ETFs
👍 Best for: Defensive portfolios
Commodity ETFs offer exposure to tangible assets like gold, silver, and oil which can greatly hedge inflation or market volatility. However, they themselves can be volatile and are best used for diversification rather than core holdings.
Commodity | Example ETF | Trading structure | Platform access |
Gold | SPDR Gold Shares (GLD) | Physical‑backed ETF | Maybank Securities, IBKR |
Oil | United States Oil Fund (USO) | Futures‑based | Interactive Brokers |
Silver | iShares Silver Trust (SLV) | Physical‑backed ETF | Moomoo, Webull |
Real Estate & REIT ETFs
REIT ETFs pool multiple real estate investment trusts into a single fund, providing property exposure without owning physical assets. REIT ETFs appeal to income‑focused investors due to regular payouts but may face rate‑sensitivity risks when interest rates rise.
Region | Example ETF | Dividend frequency | Platforms |
Singapore | Lion‑Phillip S‑REIT ETF | Quarterly | Maybank, Moomoo |
Global | iShares Global REIT ETF | Semi‑annual | IBKR, Tiger Brokers |
How to Buy and Sell ETFs in Singapore
Buying and selling ETFs in Singapore has become easier than ever, thanks to digital brokerages that let investors trade local and international markets at low cost. In general, there are 2 different types of online brokers to consider: CDP-linked (direct ownership) vs Custodian-based (broker-owned):
- CDP-linked brokers: ETFs are held under your name in SGX's Central Depository (CDP). More control and transparency to investors.
- E.g. Tiger Brokers, Maybank Securities Singapore
- Custodian-based brokers: Broker holds ETFs on your behalf. Usually lower fees and multi-market access.
- E.g. Moomoo, Webull, IBKR
Whether you're starting out or expanding your portfolio, here's a clear step-by-step guide to investing in ETFs.
Step 1 | Step 2 | Step 3 |
Choose an online broker via MoneySmart | Open and fund your account | Screen and compare ETFs |
Compare the best online brokerage platforms in Singapore via our MoneySmart investments comparison tool. Once you've shortlisted your preferred broker, click on its "Apply Now" button to be redirected to the application form. If there's an ongoing MoneySmart exclusive promo, you'll also be shown our MoneySmart exclusive rewards form. | For faster Know-Your-Customer (KYC) verification and approval, apply using Singpass MyInfo for easy information retrieval. Next, open your new trading account and fund it through FAST transfer, PayNow, telegraphic transfer, or other payment methods. Brokers like Moomoo have no minimum funding requirements, while CFD platforms such as Plus500 or FOREX.com may require higher starting balances. | Before investing, use your broker's screener to filter ETFs based on sector, region, and fees. For example, SPDR STI ETF (ES3):
ABF Singapore Bond Index Fund (A35): Lion-OCBC Hang Seng Tech ETF (HST): Plus, brokers like Moomoo and Tiger Brokers provide thematic lists such as technology or sustainability ETFs, while Webull includes analytical tools for fund comparison and performance tracking. |
Step 4 | Step 5 | Step 6 |
Place your order | Monitor and manage your portfolio | Selling your ETFs |
To buy local ETFs via SGX:
To buy global ETFs via overseas markets:
Do note however, for international ETFs, currency conversion fees and trading hours (esp. in HK or US) apply. Settlement typically occurs within T+2 working days. | All major brokers offer dashboards for live performance tracking and dividend monitoring.
Note: US-domiciled ETFs may be subject to 30%US withholding tax on dividends. | Selling ETFs follows the same process as buying.
For CDP-held ETFs, proceeds credit directly to your linked bank account whereas for custodian accounts, funds are withdrawn via the broker platform. |
💡 MoneySmart Tip: Remember to check CPF-IS or SRS eligibility to invest in ETFs with. Eligible ETFs include SPDR STI ETF (ES3) and ABF Singapore Bond Index Fund (A35).
Local vs overseas ETFs: Which should you choose?
Ideally, the more resilient and better-performing portfolios tend to be a diversified mix of ETFs that fits your goals and comfort with currency exposure. But of course, there are key advantages and disadvantages to both local and global ETFs.
ETF type | ✅ Pros | ❌ Cons |
Local (SGX) | SGD-denominated Settled by CDP Simpler tax reporting | Limited variety vs global markets |
Overseas (US, HK, global) | Broader exposure + sector themes | FX risk + withholding tax on dividends |
How to Build a Diversified ETF Portfolio in Singapore
Diversification is one of the most important principles in investing, helping you spread risk across different markets and asset types. A well-balanced ETF portfolio allows you to capture market growth while minimising the impact of volatility in any single region or sector.
Understand the types of ETFs available
ETFs come in different categories: regional, sectoral, commodity, bond-focused, and more. These are often accessible through online brokerage platforms with SGX-listed and international ETFs. For example,
Determine your risk profile
Your portfolio should reflect your goals and risk tolerance. Conservative investors typically hold more bond ETFs, while aggressive investors may prefer higher equity exposure.
Here's what ETF portfolio allocation can look like for different investor types:
Investor type | Example portfolio allocation | What it means |
Conservative | 60% bond ETFs, 30% equity ETFs, 10% REIT ETFs | Prioritises stability, preserve capital, and earn steady income |
Balanced | 40% bond ETFs, 50% equity ETFs, 10% REIT ETFs | Seeks growth with moderate risk |
Aggressive | 10% bond ETFs, 80% equity ETFs, 10% sector/thematic ETFs | Focuses on long-term returns and capital gains |
Diversify across geographies and sectors
Geographic diversification reduces exposure to country-specific risks. Hence, broadening your portfolio by combining regional and sector ETFs can help make it more resilient towards market fluctuations.
- Local ETFs: e.g. Lion-OCBC Securities STI ETF for Singapore blue-chip exposure.
- US global ETFs: e.g. SPDR S&P 500 ETF Trust (SPY), iShares MSCI World ETF (URTH).
- Asia-Pacific ETFs: e.g. For emerging market diversification.
Platforms such as Moomoo and Webull let you filter by geography and sector, including thematic ETFs like technology, clean energy, and healthcare.
Rebalance regularly
Over time, market movements can shift your portfolio away from its original allocation. Rebalancing once or twice a year ensures alignment with your risk profile. Most online brokers facilitate that by allowing you to sell overweight assets and reinvest in underweight ones.
Custodian brokers like Webull and Tiger Brokers enable fast in-app rebalancing while CDP-linked brokers like Maybank Securities offer trade settlement into your CDP account.
Additionally, be sure to keep an eye on transaction fees and foreign exchange (FX) spreads and conversion costs (0.20%–0.35%) when rebalancing international ETFs.
Monitor performance and stay disciplined
Use analytical in-app dashboards to track returns, dividends, and exposure:
- Webull/Moomoo: Real-time portfolio analytics and auto-alerts.
- Interactive Brokers: Multi-currency profit tracking and detailed reporting.
- Tiger Brokers: AI-driven trade insights and performance summaries.
Avoid reacting to short-term volatility; instead, focus on steady growth, cost control, and rebalancing discipline.
How to Manage ETF Investments Risks in Singapore
Investing in ETFs offers efficiency, diversification, and affordability, but like all investments, they come with risks. Understanding these risks and knowing how to manage them is key to building a resilient portfolio.
Market risks
🤔 What it is: ETF prices rise and fall with market conditions since they mirror and index. A downturn in underlying markets directly impacts an ETF's value.
🧠 Example: The STI ETF may decline during an economic slowdown, just as global ETFs track global downturns.
🔎 How to manage:
- Diversify across geographies (regional ETFs) and asset classes (e.g. mix STI ETFs with global equity or bond ETFs).
- Use online brokerage platforms to access broad-market and defensive ETFs.
- Consider regular rebalancing to reduce overexposure to volatile sectors.
Currency risks
🤔 What it is: For ETFs denominated in USD, HKD, or other foreign currencies, exchange rate movements affect SGD returns.
🧠 Example: A rising US dollar increases returns on US ETFs, but a stronger SGD erodes gains.
🔎 How to manage:
- Opt for SGD-hedged ETFs when available.
- Use online brokers that allow multi-currency holdings to offset FX exposure.
- Consider ETFs tracking Singapore or regional indices to minimise currency fluctuation impact.
Liquidity risks
🤔 What it is: The ease of buying or selling an ETF without significantly affecting its price. Non-liquid and rigid ETFs tend to have wider bid-ask spreads.
🧠 Example: Major ETFs on SGX or NYSE are liquid, but niche thematic or small-fund ETFs may not be.
🔎 How to manage:
- Prioritise ETFs with high average daily volume and larger fund sizes (> US$100M)
- Check trading volume using analytics dashboards.
- Avoid low-volume ETFs unless part of a niche strategy.
Tracking error
🤔 What it is: The performance gap between an ETF and its benchmark index due to fund management fees, transaction costs, or inefficient replication.
🔎 How to manage:
- Review the ETF's tracking difference on online broker's app where available.
- Choose ETFs withlow expense ratio (typically < 0.5%).
- Avoid synthetically replicated ETFs unless you understand its derivatives structure.
Leverage and CFD risks
🤔 What it is: Some brokers such as Plus500 and FOREX.com offer ETFs as leveraged Contracts for Difference (CFDs). While leverage magnifies gains, it also multiplies losses.
🔎 How to manage:
- Only use leverage if you have high risk tolerance and experience.
- Set strict stop-loss orders and use position limits.
- For long-term investing, stick to direct ETFs via MAS-licensed brokers.
At the end of the day, mitigating ETF risks starts with awareness and discipline.
Choose brokers that provide transparency and analytical tools, such as portfolio tracking on Webull, risk metrics on Interactive Brokers, and in-app insights on Moomoo. Diversify across markets, rebalance regularly, and maintain realistic expectations about short-term volatility to build a strong, resilient portfolio overall.
How to Choose ETFs in Singapore For Your Portfolio
Choosing the right ETF is a crucial step in building a strong investment foundation. With thousands of ETFs listed globally, Singapore investors should focus on new key metrics that affect performance, costs, and risk. Here's how to assess ETFs confidently before investing.
Expense ratio and tracking error | Fund size and liquidity | Underlying holdings and geography |
Represents the annual management cost of an ETF, expressed as a percentage (%) of its assets. Lower ratio = less drag on returns. E.g. of expense ratios:
Hence, a 0.2% expense ratio means you pay S$20 per S$10,000 invested yearly. Meanwhile, tracking error shows how closely an ETF follows its benchmark index. Lower errors = better tracking accuracy. | Fund size affects trading efficiency and stability. Large ETFs (AUM > US$100 million) generally have narrower bid-ask spreads, lowering trading costs. Thus, you'd want to avoid small ETFs (AUM < US$50 million that risk closure or wider price spreads. | Always review the ETF's top holdings, sector weights, and country exposure. Similar names can mask different compositions. For instance, the SPDR STI ETF has a focus in Singapore blue chips with key holdings under DBS, Singtel, and CapitaLand. Meanwhile, iShares MSCI World ETF (URTH) focuses in global developed markets and has key holdings under Nestle, JP Morgan, and Toyota. 💡 Note: One "Asia ETF" may hold Japan-heavy stocks, while another may focus on China or India. |
Practical example: Comparing two ETFs
Suppose two S&P 500 ETFs have identical holdings:
- ETF A: Expense ratio (0.25%), tracking error (0.35%)
- ETF B: Expense ratio (0.08%), tracking error (0.12%)
Over 10 years, ETF B could yield several hundred dollars more per S$10,000 invested, purely from lower fees and better tracking. This illustrates why due diligence on cost and tracking accuracy matters.
💡 MoneySmart Tip: ETF selection is about aligning cost, liquidity, and exposure with your financial goals. Focus on funds with low fees, high liquidity, and transparent holdings.
Common ETF Investment Mistakes & How to Avoid Them
Even though ETFs are designed to be simple and affordable, investors often make mistakes that can hurt their returns. Knowing what to avoid will help you stay focused on long-term growth.
1. Chasing short-term performance
❌ Mistake: Buying ETFs that recently surged in popularity due to hype or market trends, only to see prices fall soon after. Past performance is not a guarantee of future returns.
🧠 Why it matters: Momentum-driven buying often leads to buying high and selling low when sentiment shifts.
✍️ How to avoid it: Instead of reacting to trends, choose broad, diversified ETFs aligned with your time horizon and goals. Use ETF screeners as seen on brokers like Webull and Tiger Brokers to sort by 5-year returns or volatility, not just 1-month trends.
2. Ignoring fees and trading costs
❌ Mistake: Underestimating how trading commissions and platform fees impact long-term returns.
🧠 Example:Webull charges 0.025% (min. S$0.80) commission fee per order on SG ETFs and permanently waives commission fees for US ETFs. In comparison, this is cheaper than Tiger Brokers which charges 0.03% of trade value (min. S$0.99) on SG ETFs and US$0.005 per share (min. US$0.99 per order) on US ETFs.
✍️ How to avoid it: Besides commission and platform fees, be mindful of other costs that might erode your ETF returns, especially if you frequently trade. Focus on long-term investing rather than short-term speculation.
3. Misunderstanding diversification
❌ Mistake: Holding multiple ETFs that track similar indices or sectors.
🧠 Example: Both the Invesco QQQ and SPDR S&P 500 ETF heavily hold Apple, Microsoft, and Amazon.
✍️ How to avoid it: Review ETF holdings and correlation metrics before buying. Combine regional ETFs (STI, Asia-Pacific) with bond or REIT ETFs for balanced exposure.
4. Overlooking tracking error
❌ Mistake: Ignoring how closely an ETF follows its benchmark.
🧠 Why it matters: A persistent tracking error above 0.5% can reduce returns versus the benchmark.
✍️ How to check: This differs across broker platforms. Some tracking difference data may be found under a "Performance" tab like IBKR, while others might be through "benchmark vs fund returns" graphs like Webull.
5. Using leverage without understanding risk
❌ Mistake: Trading leveraged or CFD-based ETFs (via Plus500, FOREX.com, or Phillip MetaTrader 5) without understanding margin requirements.
🧠 Why it matters: Leverage magnifies both gains and losses; CFDs don't represent ownership of underlying ETFs.
✍️ How toavoid it: Only use CFDs for short-term trading or hedging. Set strict stop-loss levels and risk limits.
7. Forgetting tax implications
❌ Mistake: Overlooking foreign withholding tax on dividends from US ETFs (typically 30% for Singapore residents).
🧠 How to avoid it: Consider accumulating(non-dividend) ETFs or local SGX-listed ETFs to simplify tax handling.
Are ETFs a Good Investment in Singapore?
ETFs remain one of the most accessible and cost-effective ways to invest in Singapore. They offer a straightforward path for investors to gain diversified exposure to local and global markets without needing to pick individual stocks.
✅ Why ETFs are a strong option
ETFs combine the best of both worlds: the diversification of a fund and the flexibility of trading like a stock. With just one trade, you can gain exposure to entire indices such as the Straits Times Index (STI) or the S&P 500. This makes them ideal for building long-term, low-cost portfolios.
In general, many top MAS-regulated online brokerage platforms in Singapore offer commission-free or low-fee ETF trading. Webull charges just USD0.90 per US ETF order and waives commissions for SG trades during its promotion window, while Tiger Broker's fees start at 0.06% for SG ETFs.
👍 Benefits of ETFs | 👎 Drawbacks of ETFs |
Low cost: ETFs typically charge annual expense ratios under 0.5%, making them cheaper than mutual funds. | Market volatility: ETF prices fluctuate with market movements, and returns are not guaranteed. |
Diversification: Even a single ETF can include dozens or hundreds of securities across sectors or regions. | Tracking errors: Some ETFs may underperform their benchmarks due to fees or index replication limits. |
Flexibility: You can buy and sell ETFs anytime during market hours, unlike traditional funds. | Limited active management: ETFs don't adapt dynamically to market shifts since they follow preset indices. |
Transparency: ETF holdings are usually disclosed daily, allowing full visibility into what you own. |
For short-term traders, these limitations may pose challenges. However, for long-term investors, the benefits (especially cost efficiency and broad diversification) outweigh the risks.
Are ETFs right for you?
ETFs suit investors seeking consistent, passive growth without frequent portfolio adjustments. Beginners can start small with SGX-listed ETFs through Maybank Securities or Moomoo, while global investors can use Interactive Brokers or Tiger Brokers for broader market access.
If you value simplicity, transparency, and flexibility, ETFs can be a core part of your financial strategy. However, always review your investment goals, diversify across sectors, and stay disciplined.
FAQs About ETF Investments in Singapore
What are the top 3 ETFs?
While "top" depends on your goal, three widely referenced funds in Singapore's context are:
- SPDR STI ETF (SGX: ES3): Tracks Singapore's top 30 companies; blue chip stocks.
- SPDR S&P 500 ETF Trust (US): Tracks the S&P 500; broad global exposure.
- SPDR Gold Shares ETF (US: GLD): Offers commodity hedge via gold.
How to buy ETF for beginners?
Step 1: Compare the best MAS-licensed online brokerage account in Singapore using MoneySmart's investment comparison tool.
Step 2: Shortlist and choose your preferred broker, and apply for an account with them through our "Apply Now" button.
Step 3: You'll be redirected to the application form and/or MoneySmart Rewards Form to claim and track your exclusive MoneySmart sign-up gift, if applicable. Download the online broker app and open an account.
Step 4: Fund your account and search for the ETF ticker (e.g. ES3).
Step 5: Place a buy order just like buying a stock.
Step 6: Review fees, currency conversion (for international ETFs) and expect settlement to complete within 2 working days.
What is the best ETF for beginners?
A beginner-friendly ETF one with: low expense ratio (< 0.30%), high liquidity, tracks a broad index, and trades in SGD or with easy access. For instance, a local index ETF such as ES3 fits many beginner's criteria.
Which is the best ETF in Singapore?
There is no one "best" ETF. The ideal choice depends on your investment goals, risk tolerance, and time horizon. Use metrics like costs, fund size, tracking error, and fit with your portfolio rather than chasing the "best".
How can I earn $1,000 a month in dividends?
Theoretically, to generate S$1,000 per month (S$12,000 per year) from dividends, at say, a 4% p.a. Yield, you'd need around S$300,000 invested (S$12,000 ÷ 0.04 = S$300,000). Dividend-yielding ETFs can help generate passive income, but it's pertinent you assess yield sustainability, diversification, and tax implications.
Does ETF pay dividends in Singapore?
Yes, many ETFs distribute dividends if the underlying holdings generate income. Some ETFs accumulate dividends internally instead. Dividend policy (frequency, withholding tax) depends on the specific ETF.
What ETF can I buy with CPF?
CPF investment rules typically allow you to invest in approved unit trusts, ETFs or stocks listed on SGX or approved overseas markets. Check the CPF-approved investment list with your scheme or CPF board. Read our CPF investment guide to learn more and familiarise yourself with CPF-IS mechanics..
How much money do I need to start investing in ETFs?
In Singapore, you can often start with the price of one unit of an ETF, which may be under S$100 for local ETFs. Overseas ETFs may require US$ equivalent. Be mindful of brokerage minimums and FX fees.
Are ETFs safe to invest?
ETFs are generally considered safer than individual stock picking due to built-in diversification, regulated structure and transparent holdings. However, they still carry market risk, tracking error and currency risk.
What are the downsides of ETFs?
While ETFs are generally considered one of the safer trading instruments to invest in, their key drawbacks include:
- Market risk (Value can fall)
- Tracking error (May underperform benchmark index)
- Currency/foreign market risks (For overseas ETFs)
- Potential liquidity issues (For niche/small ETFs)
Is ETF better than stock?
It depends on your objective. ETFs offer diversification, ease and lower cost; stocks can offer higher upside (but higher risk). For many investors, ETFs are simpler and less time-intensive.
Is ETF better than FD (fixed deposit)?
ETFs carry higher risk than FDs but potentially higher returns. FDs offer capital protection and fixed interest, while ETFs offer market-linked growth with fluctuations. Choose based on risk tolerance and time horizon.
What is the 3-5-10 rule for ETFs?
This 3-5-10 rule is a practical rule: choose ETFs across 3 asset types (e.g., equity, bond, REIT), diversify across 5 geographies or sectors, and hold them for 10 years (or more) to benefit from compounding and risk smoothing.
What is the 30-day rule on ETFs?
If you reference a specific 30-day rule (e.g., taxation, settlement, promotional window), it's best to check the context. For standard ETFs in Singapore, there is no universal "30-day rule" governing holding period. Always do your due diligence in research before executing any trade.