What are Mutual Funds, and How to Trade Them in Singapore?

The very first question new investors have in mind is “what are mutual funds”? Mutual funds are a type of investment that allows you to pool your money with other investors. A fund manager invests this pool of money into various financial instruments such as stocks trade, bonds, property, etc.

These investments generate returns for the mutual fund, then distributed back to the investor. It is an excellent way to start investing, as it allows you to spread your risk across many different assets.

When you invest in a mutual fund, you will typically be buying shares in the fund. This means that you will become a part-owner of the fund and share in the profits and losses of the fund’s investments.

Investing in mutual funds can be one of the best business ideas, however, you need to have a proper business plan in order to avoid setbacks. If you are based in Singapore or looking to invest in Singapore through mutual funds, this article will guide you through the available options and how to trade mutual funds locally.

what are mutual funds

Types of Mutual Funds in Singapore

You can find an array of mutual funds in Singapore. Here are some of the most common funds:

Equity Funds

These funds invest in stocks and typically aim to provide capital growth over the long term. 

Bond Funds

These funds invest in bonds and typically aim to provide a steady income stream with low risk. 

Balanced Funds

They invest in a mix of stocks and bonds and typically seek to balance capital growth and stability. 

Money Market Funds

It invests in short-term debt instruments, such as government bills and commercial paper, and typically seeks to provide liquidity and preserve capital. 

Sector Funds

This fund invests in stocks of companies in the same industry or sector and typically aims to provide substantial return potential.

How to Trade Mutual Funds in Singapore

Investing in mutual funds can be intimidating, especially for beginners. However, there are many easy ways to do it in Singapore. 

Exchange-Traded Funds (ETFs)

ETFs invest in a diversified portfolio of shares that track an index like the Straits Times Index. They are traded like shares on various stock exchanges throughout the world. 

Mutual Fund Schemes (Unit Trusts)

These schemes pool together money from multiple investors to purchase financial assets such as bonds and stocks. Professionals who manage these schemes require less work than doing it yourself. Picking a fund to invest in and where to buy it is typically as easy as buying groceries online.

Managed Funds

These funds typically invest in stocks, bonds, and money market instruments. They are actively managed by professional investors who aim to provide better returns than those generated from other investments such as fixed deposits. 


These digital platforms allow you to invest in a range of mutual funds using automated processes. No prior investment knowledge or experience is required, and you can start with as little as S$100.

Reasons to Use an Investment Advisor

The Securities Commission has a voluntary registration system for investment advisors who deal or advise on securities. An Investment Advisor must be registered with us if their annual gross income from providing investment advice exceeds S$30,000 in any calendar year. Generally speaking, only licensed dealers may buy and sell shares listed on the Singapore Exchange (SGX). For buying or selling unlisted shares or other securities, dealers can work with unlicensed brokers.

Having an advisor for trading mutual funds is like having a business mentor. However, it would be best to only deal with licensed professionals to protect your interests fully. You should also check their records, qualifications, and expertise before signing up for any service. It is best to do extensive research before making an investment decision. Make sure you understand the risks involved before committing your money.


Whichever method you choose, it is essential to do your research before investing. Understand the risks and rewards involved in each type of investment, and always be aware of the fees charged by the fund manager. By taking the time to learn about mutual funds, you can make sound decisions about which ones are right for you. To find out more about the best mutual funds in Singapore, contact a reputable online broker from Saxo Bank and start your investment journey.

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