Hi, what’s the difference between unit trust and etfs? I read on one of seedlys blog that UT are active funds but Endowus mentions it as passive.. a little confused there?

Unit Trusts = more or less Mutual Fund congener, mostly active management, only one price fixing per day, mostly very high annual fees (more than 0.30%), mostly underperforming, not recommended!

ETFs: often passively managed, real time prices per trading, often low annual fees (less than 0.30%), performance very near to the imaged index. Modern fair investing instrument, highly recommended.​​​

Hi. I can understand the confusion! The first passively managed unit trust that I invested in so happens to be with Endowus, and previously i always have made the association that unit trusts are ALL actively managed, which is factually wrong.

Unit trusts, or mutual funds, can be actively or passively managed.

ETFs can be actively or passively managed too.

The difference is the unit trusts/mutual funds are not exchange traded, and created or redeemed by the fund manager at the end of the day at the fund's Net Asset Value (NAV)

ETFs, in contrast, are exchange traded, so it has higher liquidity, You will buy it like a stock, but as with exchange traded product, there is a bid ask spread and you will likely not be able to buy at the actual value of the funds (or NAV).

Hope that answers your question. Indexed, low costs funds are what we tend to prefer, because they are more diversified and deliver long term consistent returns, if they are globally diversified. Whether it is an ETF or a unit trust is secondary.​​​