What's the difference between unit trust and ETFs? Seems like ETF is the more popular option but STI ETF has a unit trust option as well?

Unit trusts - actively managed, higher expense ratio, dependent on the fund manager to make good stock picks. Not traded on the stock exchange - less liquid, needs more time to buy and sell.

ETFs - usually passively managed, lower expense ratios, traded on the market like regular stocks, therefore more liquid.

Hello! ETFs are usually passively managed in most instances which means there are no active buying and trading among the stocks in the basket which translates to lower management and lower expense ratio overall.

Unit Trust on the other hand are actively traded daily with a fund manager buying and selling different stocks everyday. Doing so may have the merits of a more optimised portfolio compared to ETFs which holds a bunch of stocks within a specific index, but the cons here is with higher management, it means slightly higher expense ratio.

Typical ETFs have expense ratio ranging 0.03%-0.8% VS Typical Unit Trust expense ratio ranging from 1%-3%

However: Index ETFs mostly should form your core portfolio and get close to market returns (after fees) and their aim is to match the market, not outperform the market.

Unit Trusts on the other hand tries to beat the market, and there are various funds which performed better than the market over the long run if you look hard enough.

For buy-and-forget type investors, letting a competent advisor guide you through Unit Trust may be more worth your capital if they yield market beating returns and in exchange you pay slightly higher fees for the outperformance.

ETFs still requires you to DIY and try and time the market yourself so you still need to do something about it.

Ultimately is how much control you want over your investments

Choose Unit Trusts if you really not interested to look at the market and rather just buy and forget.

Choose ETFs if you have time to look at the markets and wants to customise your own portfolio of ETFs.

Alternatively you can choose to do both!

Hope this helps!