What are Exchange-Traded Funds (ETFs)? A Comprehensive Guide for Beginners
Updated: 7 Oct 2026
Written bySingSaver team
If you want to grow your wealth without spending hours analysing individual stocks, ETF investing is one of the simplest places to start. One ETF purchase can give you a slice of dozens or even hundreds of companies, usually at a lower cost than an actively managed unit trust.
This guide covers what an ETF is and how to invest in ETF Singapore options step by step. It also explains what ETFs really cost, which ETFs Singapore investors commonly start with, and how dividend ETFs work.
Key takeaways
- An ETF is a basket of investments, such as stocks, bonds or commodities, that you buy and sell on a stock exchange like a single share.
- ETFs usually have lower fees than actively managed funds, but trading fees, taxes and currency conversion also affect your returns.
- One ETF can spread your money across many companies, sectors or countries, which reduces the impact of any single holding doing badly.
Decision Guide
ETF meaning and definition
Think of an exchange-traded fund as a basket of assets, such as stocks, bonds, commodities or currencies, bundled into a single security that trades on a stock exchange. Instead of buying shares in 30 different companies, you buy units of one ETF that tracks an index of those companies.
ETFs are listed on exchanges such as the Singapore Exchange (SGX) and trade throughout the day like individual stocks. That intraday trading, combined with typically lower expense ratios than traditional unit trusts, explains much of their popularity.
ETFs aren't a universal solution, though. Before you invest, weigh the expense ratio, liquidity (how easily you can buy or sell), and how well the ETF fits your goals and risk tolerance.
How do ETFs work?
- Fund creation: An ETF provider, usually a fund management company, builds a portfolio designed to track a specific index and lists it on an exchange under a ticker symbol, such as ES3 or G3B on SGX.
- Investor participation: You buy and sell units of the ETF through a brokerage account or regular savings plan, just as you would buy shares of a company.
- Exchange trading: ETF prices move throughout the trading day with supply and demand. SGX trades settle two business days after the trade date (T+2).
Owning ETF units doesn't make you the direct owner of the underlying assets, but you're entitled to any distributions the fund pays. An ETF's market price can also differ slightly from its net asset value (NAV) because of trading activity, market sentiment and fund expenses.
>> Ready to go? Learn more about investing in ETFs
📈 Your next trade could come with more
Explore Singapore’s leading brokerage platforms, compare their offers, and unlock exclusive cash, the latest gadgets, or miles rewards with SingSaver. 💰🎁 T&Cs apply.
How to invest in ETFs in Singapore
There are three main ways to start investing in ETFs in Singapore. Which one suits you depends on how hands-on you want to be.
Before You Compare
Compare the total expense ratio (TER)
Small fee gaps compound over decades; the two STI ETFs charge roughly 0.25%–0.28% a year.
Add up the all-in cost per trade
Commission, platform fee, SGX clearing and trading fees plus 9% GST all apply per order.
Check liquidity and the bid-ask spread
Thinly traded ETFs can cost more to buy and sell than their expense ratio suggests.
Know where the ETF is domiciled
US-domiciled ETFs face 30% dividend withholding tax and possible US estate tax exposure.
Choose distributing or accumulating units
Distributing units pay cash dividends; accumulating units reinvest them automatically.
Route A: Open a brokerage account
- Choose a broker. Compare all-in fees, the markets you can access, and whether the account is CDP-linked (shares held in your own name at the Central Depository) or custodian-based (the broker holds them for you).
- Open and verify your account. Most digital brokers let you apply online with Singpass MyInfo, and approval often takes a day or two.
- Fund your account. Transfer SGD from your bank account. If you plan to buy US-listed ETFs, check the broker's currency conversion rates and fees.
- Place your order. Search for the ETF's ticker (for example, ES3 or G3B for the STI ETFs), choose an order type, and buy during market hours. SGX-listed ETFs trade in board lots of 100 units, while many brokers offer fractional units for US-listed ETFs.
- Review periodically. Check your allocation once or twice a year and rebalance if it drifts from your plan.
>> Want to get started? Check out the best brokers in Singapore for trading ETFs
Route B: Regular savings plans (RSP)
If you prefer an automated approach, an RSP invests a fixed sum into your chosen ETF every month. This dollar-cost averaging spreads your purchases across market highs and lows.
- DBS/POSB Invest-Saver: From S$100 a month into a short list of SGX-listed ETFs, with a sales charge of 0.50% for bond ETFs and 0.82% for equity and REIT ETFs.
- OCBC Blue Chip Investment Plan: From S$100 a month into selected SGX blue-chip stocks and ETFs.
- FSMOne Regular Savings Plan: From S$50 a month, with a wider ETF selection across several markets.
>> Compare your options in our regular savings plan guide
Route C: Robo-advisors
A robo-advisor such as StashAway builds a diversified ETF portfolio based on your risk profile, then invests and rebalances it for you. You pay an annual management fee on top of the ETFs' own expense ratios, in exchange for not having to pick or rebalance funds yourself.
Using CPF or SRS savings
Both STI ETFs are included under the CPF Investment Scheme, so you can buy them with CPF Ordinary Account savings through your CPF agent bank. You can also invest Supplementary Retirement Scheme (SRS) funds in eligible ETFs through your SRS operator or a broker that supports SRS.
Types of ETFs available in Singapore
When building an ETF Singapore portfolio, you'll come across these main categories.
Stock ETFs
Stock ETFs track an equity index, so you can buy into an entire market at once. Singapore's best-known index is the Straits Times Index (STI), which tracks the 30 largest companies listed on SGX. Two ETFs track it:
- the State Street SPDR Straits Times Index ETF (ES3);
- the Amova Singapore STI ETF (G3B), formerly the Nikko AM Singapore STI ETF.
Both give you heavy exposure to Singapore's banks and real estate counters. For global exposure, many local investors buy ETFs tracking broad indices such as the S&P 500 or MSCI World through their brokerage accounts.
Examples of stock ETFs:
- SPDR Straits Times Index ETF (ES3): Tracks the STI.
- Amova Singapore STI ETF (G3B): Also tracks the STI.
- iShares MSCI World ETF: Tracks a broad global equity index.
>> Check out the best ETFs in Singapore
>> Read more about investing in stocks
Bond ETFs
Bond ETFs hold government or corporate bonds. They suit investors who want steadier income and lower volatility than equities.
Examples of bond ETFs:
- ABF Singapore Bond Index Fund (A35): Tracks Singapore government and quasi-government bonds.
- Amova SGD Investment Grade Corporate Bond ETF (formerly Nikko AM): Invests in SGD-denominated investment-grade corporate bonds.
- iShares Core U.S. Aggregate Bond ETF: Tracks a broad US bond market index.
>> Read more about Singapore Savings Bonds (SSBs)
Commodity ETFs
Commodity ETFs track the price of physical commodities rather than company shares. The best-known among Singapore investors is SPDR Gold Shares, which gives you exposure to gold prices without storing physical bullion.
Examples of commodity ETFs:
- SPDR Gold Shares: Tracks the price of gold.
- iShares Silver Trust: Tracks the price of silver.
- Invesco DB Commodity Index Tracking Fund: Tracks a broad basket of commodity futures.
>> Read more about investing in gold
Country-specific ETFs
Country ETFs let you target a single market or region. For example, an STI ETF focuses on Singapore, while the iShares MSCI China ETF and iShares MSCI India ETF give you exposure to those markets. These can help you diversify internationally, though a single-country fund carries that country's economic and political risks.
>> Read more about SPDR STI ETF vs. Amova STI ETF
Sector-specific ETFs
Sector ETFs focus on one industry, such as technology, healthcare or real estate. Examples include the Technology Select Sector SPDR Fund, the Health Care Select Sector SPDR Fund and the Real Estate Select Sector SPDR Fund. They suit investors with strong views on an industry, but are usually more volatile than broad-market ETFs.
>> Read more about technology ETFs and how to invest in the AI boom
Exchange-traded notes (ETNs)
ETNs sound similar to ETFs, but they're unsecured debt issued by a bank that promises to pay the return of an index. They don't own the underlying assets.
If the issuer runs into trouble, you could lose money even if the index performs well. Issuers can also redeem or delist ETNs early, which has happened to a number of commodity ETNs over the years.
ETNs are mainly listed in the US and are usually used for commodities, currencies or complex strategies.
>> Read more about futures trading
Crypto ETFs
Crypto ETFs track digital assets such as Bitcoin or Ether. The Monetary Authority of Singapore (MAS) hasn't approved spot crypto ETFs for offer to retail investors here, so none are listed on SGX for retail investors.
You can still access overseas-listed crypto ETFs, such as US spot Bitcoin ETFs, through MAS-licensed brokers with overseas market access. These brokers must provide risk disclosures and may assess your suitability first.
Examples of crypto ETFs:
- Spot Bitcoin ETFs: Hold Bitcoin directly, e.g. iShares Bitcoin Trust (IBIT) and Fidelity Wise Origin Bitcoin Fund (FBTC).
- Bitcoin futures ETFs: Hold Bitcoin futures contracts rather than Bitcoin itself, e.g. ProShares Bitcoin Strategy ETF (BITO).
- Crypto-related company ETFs: Hold shares of companies in the crypto ecosystem.
>> Read more about the best cryptocurrency exchanges in Singapore
Leveraged and inverse ETFs
Leveraged ETFs aim to deliver a multiple, usually two or three times, of an index's daily return, while inverse ETFs aim to deliver the opposite. For example, a 2x ETF on the Nasdaq-100 aims to return 2% on a day the index rises 1%, and lose 2% on a day it falls 1%. Because returns reset daily, long-term results can differ significantly from the multiple you expect, so these products are generally meant for short-term trading by experienced investors.
Important note on leveraged ETFs in Singapore: MAS classifies leveraged and inverse ETFs as Specified Investment Products (SIPs). Before you can trade them, your broker must assess whether you have the relevant investment knowledge or experience. If you don't meet the criteria, you may need to complete an educational module or you won't be able to trade them.
Which ETF to buy in Singapore? Popular picks by goal
When deciding which ETF to buy, Singapore investors usually start with their goal rather than past returns. The table below shows commonly held ETFs by purpose. It's a starting point for your own research, not a recommendation.
| Your goal | Commonly considered ETFs | Where it's listed | Things to note |
|---|---|---|---|
| Singapore blue-chip exposure | SPDR STI ETF (ES3), Amova Singapore STI ETF (G3B) | SGX | Expense ratios roughly 0.25%–0.28% a year; semi-annual distributions; CPFIS-included |
| Steady income with lower volatility | ABF Singapore Bond Index Fund (A35) | SGX | Tracks Singapore government and quasi-government bonds |
| Higher dividend income | Lion-Phillip S-REIT ETF (CLR), CSOP iEdge S-REIT Leaders Index ETF (SRT) | SGX | Concentrated in property; payouts vary with REIT earnings and interest rates |
| Global diversification | ETFs tracking the MSCI World or S&P 500 (US- or Ireland-domiciled) | NYSE / LSE | Domicile affects dividend withholding tax and US estate tax exposure |
| Hedge against market swings | SPDR Gold Shares | NYSE, also traded on SGX | Pays no dividends |
>> Check out the best ETFs in Singapore
SingSaver x Webull Exclusive Offer
Open a Webull account and fund a minimum of SGD3,000 to receive S$110 Cash. Fund SGD10,000 to get S$250 Cash, S$50 eCapitaVoucher + Samsung Galaxy Buds4 Pro (worth S$349) (total worth S$399), or 13k Max Miles by Heymax (worth S$234). Or, top up from as low as S$35 to get a Dyson Purifier Cool™ Gen 1. Valid till 11 October 2026. T&Cs apply.
Dividend ETF Singapore: do ETFs pay dividends?
ETFs can pay dividends (called distributions) if their underlying assets, such as stocks, REITs or bonds, pay income. There are two types of ETF units:
- Distributing units: Pay dividends out to you in cash, typically quarterly or semi-annually.
- Accumulating units: Reinvest dividends back into the fund, so your returns compound without you having to reinvest manually. For example, the Amova Singapore STI ETF has both a distributing class (G3B) and an accumulating class (GAB).
Choose distributing units if you want regular income, and accumulating units if you're investing for long-term growth.
SGX-listed dividend ETFs to know
If you're looking for a dividend ETF in Singapore, the options generally fall into three groups:
- S-REIT ETFs: Such as the Lion-Phillip S-REIT ETF (CLR), CSOP iEdge S-REIT Leaders Index ETF (SRT) and Amova AM-StraitsTrading Asia ex Japan REIT ETF (CFA). These usually offer the highest yields on SGX, because REITs distribute most of their taxable income.
- Bond ETFs: Such as the ABF Singapore Bond Index Fund (A35) and the iShares USD Asia High Yield Bond ETF, for more predictable income.
- Broad equity ETFs: The two STI ETFs pay semi-annual dividends from Singapore's blue chips, though they're designed for broad market exposure rather than maximum yield.
Yields change with prices and payouts, so check the latest distribution yield on the SGX ETF screener or the fund factsheet before you invest.
How ETF dividends are taxed
Singapore doesn't tax dividends or capital gains for individual investors. For overseas-listed ETFs, however:
- US-domiciled ETFs have 30% withholding tax deducted from dividends before you receive them.
- Many Ireland-domiciled UCITS ETFs face a lower 15% withholding rate on the US dividends they receive, and no further withholding when they pay you.
>> Check out our dividend investing guide
ETF investment Singapore costs: fees and expenses explained
ETF prices on SGX
SGX-listed ETFs range from a few dollars to over a hundred dollars per unit, and most trade in board lots of 100 units. To work out your minimum investment, multiply the unit price by 100. For example, at S$5.50 a unit, one lot costs S$550 before fees.
Expense ratios
The expense ratio is the annual fee the fund manager charges to run the fund, expressed as a percentage of your investment. It's deducted from the fund's assets, so you never see a separate bill. An expense ratio of 0.50% means S$5 a year for every S$1,000 invested.
Even small differences compound over time. For example:
- SPDR STI ETF (ES3): Roughly 0.28% a year.
- Amova Singapore STI ETF (G3B): Capped at 0.25% a year.
Trading costs
- Brokerage commission and platform fees: Most brokers charge one or both on every trade, usually as a percentage with a minimum per order.
- SGX fees and GST: SGX charges a clearing fee (0.0325%) and a trading fee (0.0075%) on each trade, and 9% GST applies to these fees and to broker charges.
- Bid-ask spread: You typically buy at the higher ask price and sell at the lower bid price. Spreads are wider for thinly traded ETFs.
- Currency conversion: Buying US- or UK-listed ETFs means converting SGD, and conversion spreads vary between brokers.
Tax considerations
Singapore doesn't impose capital gains tax on individual investors. US-domiciled ETFs come with two tax points to keep in mind:
- Their dividends have 30% withholding tax deducted at source.
- Holdings above US$60,000 may be subject to US estate tax for non-US persons.
This is why some investors prefer Ireland-domiciled UCITS ETFs listed on the London Stock Exchange for global exposure.
SingSaver x Longbridge Exclusive Offer
Get S$388 Cash, S$420 Grab Vouchers, or an Apple Watch SE Gen 3 40mm (GPS) (worth S$349) + S$50 eCapitaVoucher Bundle (total worth S$399) when you apply and get approved for a Longbridge SG account, fund a min. of S$2,000, make at least 1 trade and maintain the assets for 30 days from the day after meeting the deposit criteria. Valid till 18 October 2026. T&Cs apply.
Choosing the right ETF for your portfolio
- Cost: Compare expense ratios. Lower ongoing costs mean more of your money stays invested.
- Passive vs active: Most ETFs passively track an index. Actively managed ETFs charge more to try to beat the market, with no guarantee they will.
- Liquidity: ETFs with low trading volumes tend to have wider bid-ask spreads, which makes them costlier to trade.
- Fit with your goals: Check what the ETF actually holds and whether it overlaps with what you already own.
- Brokerage fees: Factor in minimum fees, especially if you invest small amounts regularly.
ETF advantages and disadvantages
| Advantages of ETFs | Disadvantages of ETFs |
|---|---|
| Instant diversification: One purchase spreads your risk across dozens or hundreds of holdings. | Market risk: If the index or sector falls, your ETF falls with it. |
| Lower cost: Passively managed ETFs generally charge lower fees than actively managed unit trusts. | Tracking error: Fees and expenses can cause returns to differ slightly from the index. |
| Liquidity: You can buy or sell any time during market hours. | Trading fees: Commissions, platform fees and exchange fees apply each time you trade. |
| Transparency: Most ETFs publish their holdings regularly, many of them daily. | No outperformance: An index ETF aims to match the market, not beat it. |
| Low barrier to entry: You can start with one SGX board lot of 100 units, or with fractional units of many US-listed ETFs. | Concentration in some products: Sector, country and leveraged ETFs can be far more volatile than broad-market funds. |
ETF creation and redemption in Singapore
The creation and redemption of ETF shares involve a mechanism that helps ensure the ETF's price closely tracks the value of its underlying assets. This process is typically handled by institutional investors known as Authorised Participants (APs). APs have the ability to create new ETF shares by delivering a basket of assets that mirrors the ETF's holdings, or they can redeem ETF shares by exchanging them for the underlying assets.
In Singapore, retail investors generally don't participate directly in the creation and redemption process. Instead, they buy and sell ETF shares on the open market through brokerage accounts. The APs' activities help maintain the ETF's liquidity and ensure its price stays aligned with its net asset value (NAV).
Buying and selling ETFs: what Singapore investors should know
Trading hours and liquidity
SGX trades from 9am to 12pm and 1pm to 5pm Singapore time, with a midday break from 12pm to 1pm. Trades settle on T+2.
ETFs with high trading volumes are generally more liquid, so you can trade larger amounts without moving the price much. Thinly traded ETFs may have wider bid-ask spreads.
Order types
- Market orders: Buy or sell immediately at the best available price. They're fast, but you may get a worse price in a fast-moving market.
- Limit orders: Set the maximum price you'll pay or the minimum you'll accept. You get more control, but your order may not be filled.
- Stop orders: Become a market order once the ETF hits your stop price. Useful for limiting losses or locking in gains.
- Stop-limit orders: Become a limit order once the stop price is reached, so you control the execution price.
How ETFs compare to mutual funds and stocks
ETFs vs mutual funds (unit trusts)
- Trading: ETFs trade throughout the day on an exchange. Unit trusts are priced once a day, at the end of the trading day.
- Expenses: ETFs generally have lower expense ratios, because most passively track an index. Unit trusts may also charge sales charges and platform fees.
- Minimum investment: SGX ETFs trade in lots of 100 units, while many unit trusts let you invest a fixed dollar amount.
ETFs vs stocks
- Diversification: One ETF holds many companies, while a single stock concentrates your risk in one company.
- Accessibility: ETFs give you access to bonds, commodities and overseas markets that are harder to buy individually.
- Liquidity: Popular ETFs are as easy to trade as large-cap stocks.
| ETFs | Unit trusts | Stocks | |
|---|---|---|---|
| Fees | Low expense ratios + trading fees | Higher expense ratios, possible sales charges | Trading fees only |
| Trading | Intraday | Once a day at end-of-day price | Intraday |
| Diversification | Built in | Built in | None (single company) |
| Capital gains tax in Singapore | None for individuals | None for individuals | None for individuals |
>> Find out about ETFs vs. unit trusts instead
Stay ahead in everything finance
Subscribe to our newsletter and receive insightful articles, exclusive tips, and the latest financial news, delivered straight to your inbox.
FAQs
What is an ETF in simple terms?
An ETF is a fund that holds a basket of assets, such as stocks or bonds, and trades on a stock exchange like a single share.
How do I buy an ETF in Singapore?
Open a brokerage account with SGX access, fund it, search for the ETF's ticker and place an order during market hours. Alternatively, set up a monthly regular savings plan with a bank or FSMOne, or use a robo-advisor.
How much money do I need to start investing in ETFs?
For SGX-listed ETFs, you need enough for one board lot of 100 units plus fees. For example, at S$5.50 a unit, that's S$550 before fees. Regular savings plans start from S$50 to S$100 a month, and some brokers offer fractional units of US-listed ETFs.
Are ETF dividends taxed in Singapore?
Singapore doesn't tax dividends for individual investors. However, dividends from US-domiciled ETFs have 30% US withholding tax deducted before you receive them.
Can I buy ETFs with CPF or SRS?
Yes, for eligible ETFs. Both STI ETFs are included under the CPF Investment Scheme, and you can invest SRS funds in eligible ETFs through your SRS operator or a broker that supports SRS.
Are ETFs safe?
ETFs reduce single-company risk through diversification, but their value still rises and falls with the market. Leveraged, inverse and single-sector ETFs carry significantly higher risk.
Relevant articles
How to Invest in ETFs: A Guide for Beginners
Exchange Traded Funds (ETFs) have become a popular investment vehicle. Find out how to invest in ETFs, how they work and what ETFs are available for trading in Singapore.
About the author
SingSaver team
At SingSaver, we make personal finance accessible with easy to understand personal finance reads, tools and money hacks that simplify all of life’s financial decisions for you.