Actively Managed Funds

An actively managed fund pools money from many investors and hands it to a fund manager who decides what to buy and sell, aiming to outperform a benchmark index. In Singapore these are usually structured as unit trusts (also called mutual funds), where you own units whose price is the net asset value calculated once a day.

You are paying for human judgement: stock selection, market timing, and access to areas that are harder to reach passively, such as specific sectors, emerging markets, or active bond strategies. That expertise comes at a cost, and the central trade-off is whether the manager's after-fee performance justifies the higher charges.

Decades of evidence show that, after fees, most active equity funds do not consistently beat a comparable low-cost index over the long run. Active funds can still make sense for less efficient or specialised markets, or for investors who want a specific strategy a plain index does not provide.

You buy unit trusts in Singapore through fund platforms and banks such as FSMOne, POEMS, dollarDEX, Endowus, or your retail bank. Funds are bought in SGD or other currencies, and the platform handles the subscription and redemption with the fund house. Redemptions typically settle in a few business days, so they are less instant than selling an exchange-listed ETF.

Costs include an annual management fee built into the total expense ratio, and historically a sales charge (front-end load) of up to around 5%. Many platforms today offer funds at zero or sharply reduced sales charge, but the recurring management fee, often higher than an index ETF's, is the bigger long-term drag. Some platforms also rebate trailer commissions back to you (Endowus, for example, operates on a clean, no-trailer-fee model).

Selected unit trusts are CPFIS-eligible and SRS-eligible, so you can use CPF Ordinary Account savings (above the first S$20,000) or SRS funds to invest. CPFIS-included funds must meet CPF Board cost and risk criteria, which screens out higher-fee options.