best mutual funds singapore(1)

How to Choose the Best Mutual Fund in Singapore 2022

Mutual funds are ideal for investors that desire to make extra income because of this diverse range of investment opportunities. Some mutual funds involve riskier assets such as stocks and real estate, while others can be safer investments such as bonds, but each fund is different so it’s good to do some research before deciding on which would be best for you. 

Many people may never consider mutual funds a viable investment option, but this is an expensive mistake. Here, we will discuss mutual funds and why it is a good investment. By the end of the article, you should have a grasp on which is the best mutual fund in Singapore tailored to your needs.

What is a Mutual Fund?

A fund consists of money from many investors to purchase stocks, bonds or other securities (known as assets). Investors buy mutual funds through brokers who charge fees for purchasing and selling the fund’s shares. A portfolio will then be created with different types of available funds that fit the investor’s individual needs. As well as professional management there may also be an active secondary market in which investors can buy or sell their holdings at any time.

Mutual funds are good for people who don’t have so much money. A mutual fund is when you get to become a part-owner of companies without spending all the money buying them yourself. You can then invest your money in this company, and if they do well, you will get more of their profit. 

  • If you would like to save for the future (such as retirement), you will need to plan for specific investments that will grow your money, yet still be reliable. 
  • However if you are looking for short-term gains, it would be best to look towards riskier funds.
  • With the pooling of many individuals’ money together at once there are also economies of scale involved where the fees associated with mutual funds can be less than what they would be if an individual were trying to invest in all these assets by themselves. 
  • If you’re not sure how to get started, don’t worry. Mutual fund companies have people who can help you choose the right one for your needs and will walk you through the entire process.


  • You don’t have to be a millionaire to invest in them
  • They offer a variety of options, so you can find one that fits your needs
  • They are a low-risk investment
  • They are great for teaching kids about investing
  • You can earn a return on your investment if the companies do well
  • They are a stable investment option


  • The first risk is that mutual funds can be volatile. This means that the value of the fund can go up or down quickly and drastically. For example, in 2008 the stock market crashed, causing the value of many mutual funds to plummet.
  • Another risk is that mutual funds can be expensive. Management fees and other expenses can add up, which can eat into your profits.
  • Another risk is that mutual funds are not very liquid. This means that it can be difficult to sell your shares if you need to.
  • Finally, mutual funds are not insured like bank deposits are. So if the fund loses money, you could lose some of your investment.

Once you determine what type of investor you want to be, there are three different types of mutual funds to choose from:

Types of Funds

Actively managed funds 

As the name suggests, this type is managed by fund managers who buy and sell securities in an attempt to beat a predefined benchmark index such as the Straits Times Index (STI). The higher the fees charged by the manager, the more they might pay themselves. You must decide whether or not it’s worth paying extra for strong performance.

Index-tracking funds

This is one of the most popular types of funds in Singapore because it is relatively cheap. Index-tracking portfolios are designed to mirror the performance of an index.

A combination of Actively managed and Index-tracking Funds

This hybrid combines both active management, in that fund managers will actively trade for higher returns, with index-tracker funds, in that they’re low cost investment products.

While mutual funds are great for diversifying your investments you must be aware of fees. There are four main types of costs involved in owning funds:

  • Initial charges when purchasing or selling shares 
  • Annual administration fees
  • Unit trust management expenses (charged when buying or selling units on the secondary market) 
  • Fund performance fees (charged when the investment performs well)

researching on investment

Mutual Funds vs Exchange-Traded Funds vs Unit Trusts

Mutual funds, exchange-traded funds and unit trusts are different investment vehicles, but they share some similarities. Index mutual funds invest in other mutual funds or other financial products. ETFs track an index or a basket of assets like an index fund does, while a unit trust is also known as an open-ended fund because it continually issues additional units to meet investor demand. 

Mutual Funds

A management company creates a portfolio for the mutual fund that includes various investments such as stocks, bonds and money market instruments. The mutual fund company charges the manager a fee to build this portfolio. It also charges annual fees to investors who hold shares in the mutual fund. These fees decrease returns earned by investors throughout the year.


An ETF gathers money from many investors and invests the pool into a range of stocks, bonds or other assets. The value of an ETF is based on investor demand. It doesn’t often deviate much from the value of its underlying asset. Read more on how to invest in ETF Singapore.

Unit Trusts

A unit trust also pools investors’ money and invests in a selection of financial instruments such as shares, bonds and money market securities. A fund manager oversees this portfolio. A fund can sell units to make up any shortfall between the value it receives for its underlying investments and the amount needed to pay out all the interest payable along with dividends to its members when they come due. Unit trusts might not sell their underlying investments and typically aren’t affected by supply and demand.

Mutual funds and ETFs can invest in a variety of instruments, such as stocks, bonds and money market securities. Unit trusts tend to focus more on fixed interests like bonds. Unlike mutual funds and ETFs, unit trust investors buy the exact portion of the fund that mirrors its underlying asset’s value. 

The Best Mutual Funds in Singapore

Equity Funds Fixed-Income Funds Index Funds Specialty Funds Balanced Funds
Moderate to large returns Provides stability even when stock market crashes Stable and independent from the stock market Target-specific investment  Low volatility
Passive income Passive income Best passive income for beginners Best passive income for beginners Passive income without need for detailed research
Involves dividends Consistent returns Low maintenance Above-average returns Low return of investment but lowest risk
Good liquidity Can be short term or long term Can start for as low as S$500 Only a small capital is needed Only a small capital is needed
Low risk investment Low interest rates but low risk Great for retirement plan Ideal plan if you do not want to invest in blue chip companies Low-cost and very passive investment


Equity Funds

Equity funds are defined as investments with stocks. People who are living in Singapore are able to invest their money into these equity funds. There are various types of equity funds that exist for different types of people. A popular option is dollar cost averaging where a person invests regular amounts of their income on a monthly basis.

The most popular type of equity fund available in Singapore is unit trust funds . These funds offer access to investments made by companies, banks or governments through professionally managed portfolios containing shares, warrants, debentures, money market instruments and deposits. Their main goal is to get higher returns with low volatility compared to buying and selling individual shares.

Fixed-Income Funds

Fixed-income funds, also known as bond funds, are a type of mutual fund that invests in a group of fixed-income securities with a similar maturity date. The income these types of investments produce is not as high as those from stocks but tend to be more stable and have less volatility than other investments. 

Fixed Income Funds can be used as a form of diversification within your portfolio because they tend to decline less than stocks during downturns. They also do not depend on the ability of a given company, country or industry to be able to pay for their financial obligations and as such, investors can rest assured that they will receive all interest payments due them and eventually the full value of their principal. Some fixed-income funds include treasury bills, treasuries, corporate bonds and other types of debt instruments issued by companies or governments.

investment graph

Index Funds

Index funds in Singapore are one of the most popular ways to invest money. Index funds can be defined as mutual funds that track a market index such as the S&P 500. They allow you to participate in your country’s economy and help diversify risk.

Index funds in Singapore are often chosen by people who want to invest money but do not feel like they have enough time to research each company and decide which ones would be best for their portfolio. They come with a standard set of criteria that tells you exactly what percentage of your money goes into which stocks within the fund, and they will usually charge you a small fee for operating costs. 

Specialty Funds

There are over 400 specialty funds listed on the Singapore Exchange. As the name suggests, specialty funds deal with specific sectors or industries within finance. 

The more specific a fund is, the easier it is to research and invest in it because there will be fewer companies to sift through when looking for good investments. This also means that these funds are able to take advantage of trends – Singapore has been going through an economic boom recently, so local funds have been thriving off this particular trend which gives them high yields.      

Since they’re not as popular, specialty funds may seem like a risky investment at first glance due to their specialized nature. In order to be successful, funds have to go beyond the average blue chip stocks.

Balanced Funds

Balanced funds are one of the four main categories that investment funds fall under. They are generally considered to be a “moderate risk” investment, although this will vary depending on the individual fund itself. These types of funds contain different classes of assets including stocks, interest-bearing securities and derivatives with varying degrees of risk/return potential.

Balanced funds provide investors with income as well as return their invested capital over time. Returns may come from dividends paid by companies whose shares are owned by the fund, interest paid on debt securities or gains made on derivative investments. Balancing these potentially differing sources of return will require active management; some balanced funds will offer lower returns than funds that invest more heavily in one area over another.

Although balanced funds can be considered “low risk” investments, there is still a chance the value of the fund will fall and investors may lose some or all of their capital. However your financial advisor can help you choose an appropriate investment for your situation if this concerns you.

How to Purchase Mutual Funds in Singapore

Mutual funds are a great way to invest your money without taking on too much risk. If you’re looking for a stable investment that will give you a little bit of return, mutual funds are a great option for you.

There are lots of different types of mutual funds, so it’s important to do your research and find the one that fits your needs. If you’re not sure where to start, ask your financial advisor for help.

If you’re looking for a low-risk investment, mutual funds are a great option. You can buy shares in a number of different companies without spending a lot of money, and you can earn a return on your investment if the companies do well.

Contact Respective Companies

You will need to contact the respective companies for the type of funds you are looking to invest in. If there’s a specific mutual fund that you have your eye on, it would be best if you do this method because then you get to buy it at its cheapest available price without having transaction fees added into its already marked-up price.

Register with a Brokerage

A second way is to ask an agent over the phone or online who’s acting as a middleman between you and the mutual funds company. Suppose for example, some broker firm has been marketing those packages to their clients on behalf of a particular fund company. In that case, the mutual funds company speaks to that broker firm about your purchase and portrays as a middleman between you and that broker firm.

Check Your Bank

Many of the major banks in Singapore provide investment services for customers. Within those options are mutual funds. If you find the mutual fund that you like in the bank, you can immediately register and begin your investment. 

Just be sure to research the requirements before signing up since these funds may have underlying conditions between the fine print such as required budget, fees and tenure. Some banks may be more transparent than others. 


Overall, mutual funds are an excellent option for an investor to participate in a group effort where the potential diversity and ease of chance make up for its lack of exclusivity. A mix of both blue chip and specialty funds is the best way for investors to diversify their portfolio. In general, specialty funds are a good addition for those who have some investing experience already.

Mutual funds are also a great way to teach kids about investing. It’s a good way for them to learn how to save money and invest in something that has the potential to grow over time.

  • Equity funds can be either domestic or international, and they can be classified as value or growth funds.
  • Fixed-income funds are generated by investing in a portfolio of fixed-income securities, such as bonds, notes, and debentures.
  • Index funds are mutual funds which allow an investor to purchase a piece of a diversified collection of assets.
  • The main benefit of investing in a specialty fund is that the investor can gain exposure to a particular asset class or sector that they might not be able to do on their own.
  • Balanced funds aim to provide investors with income as well as return their invested capital over time by paying dividends from companies whose shares they own or interest from bonds they hold and gains from derivative investments.

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