ETF vs Unit Trust. Which is a better option for beginner investor?

Hey! thanks for asking, it's a layered question that needs a lot more context. So I'll try my best to help.

Short answer

I read this dummies guide book that covers ETF & Unit Trust(Also known as mutual funds) (Link removed), as well as lot of personal finance guides and generally the consensus is that ETFs are much better much generally, the fees are significantly cheaper, like 1-2% per annum versus 0.3% or less for ETFs.

ETFs also has much better liquidity because it's traded publicly on the stock market, unlike unit trusts. However, ever unit trust and ETFs are different so you really need to dig deep to understand it like what CH as said, but as i said above, GENERALLY, ETFs are cheaper, tit for tat.

If you're interested to start learning how to passively invest, you can borrow the book from any lib(it's a quick read actually, like within 3-5 hours can finish I recall) or support my amazon link.

Or go and Youtube 'Index investing millionaires' and you'll learn how to invest in index funds ETFs or mutual funds.

P.S If you found this helpful, please show some love on my YT Channel cause my livelihood depends on it ;) In the meantime, stay safe during covid!​​​

Your simple answer, lies in FEES. If you were to compare a similar ETF to a similar Unit Trust, they have a rather similar allocation/holding. Hence returns will most likely be rather similar. The difference lies in whether you want better than market returns or satisfied with market returns (after fees). If your horizon is long term (10 years at least), fees really do add up.

Unit Trust's fees will be around 1.5%-4% on average and these are fees you pay on a RECURRING basis regardless of fund performance.

ETFs fees (expense ratios) will range around 0.03%-0.5% on average and are fees that you pay to the ETF manager on a RECURRING basis regardless of ETF performance.

That said, 80% of Unit Trusts out there will not beat the market the longer the time horizon. So if you are a long term investor, going with ETFs will almost always beat Unit Trust simply because of lesser recurring fees and charges. (Provided you choose the right ETFs and the right time horizon)