Mutual Funds vs Unit Trusts vs ETFs vs Money Market Funds: What’s the Difference?

mutual funds vs unit trusts vs ETFs - what's the difference?

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There are lots of different ways to grow your money (such as via a unit trust, mutual fund, ETFs, or investment unit trust) but the hard part is figuring out what’s right for the current market conditions, your personal preferences and risk appetite.

To make life easier for you, in this article we’ll address some of the common ways to grow your money — which, BTW, has been growing in popularity since the stock market has plummeted and stagflation is happening.

We’ll also discuss some of the key differences between mutual funds, unit trusts, ETFs and money market funds (also known as cash management funds).

Mutual Funds vs Unit Trusts vs ETFs vs Money Market Funds: Overview

Mutual Funds Unit Trusts ETFs Money Market Funds
Basket of investments Stocks, bonds and other securities Stocks, bonds and other securities Securities on index, sector, commodity or asset being tracked Fixed deposits, treasury bills and other securities
Management Active Active Passive Depends
Can it be purchased on the stock market? No No Yes No
Fees Tends to be higher Tends to be higher Traded like a stock, depends on the market Minimal management fee charged while account is active

Let’s delve deeper into what each investment vehicle is:

What are mutual funds?
When you buy a mutual fund, you are pooling your cash together with that of other shareholders to buy into a basket of stocks, bonds and other securities. The idea is that with more money pooled together, you can enjoy a more diversified portfolio. Mutual funds are actively managed by professional fund managers, and gains can be reinvested or paid out as dividends. The price of the mutual fund is determined by the net asset value (NAV) of the portfolio.

What are unit trusts?
Unit trusts are similar to mutual funds in that they give you access to a basket of securities. The structure, however, differs as you are becoming the beneficiary of a trust when you buy unit trusts. The price of a unit trust changes according to market conditions and demand.

What are ETFs?
ETFs or exchange-traded funds track the performance of an index, sector, commodity or some other kind of asset, thus enabling you to invest in the collective performance of a bunch of securities. For instance, the Straits Times Index (STI) ETF tracks the performance of 30 of Singapore’s biggest companies. ETFs can be bought and sold on a stock exchange and are thus highly liquid, with a fluctuating market price.

What are money market funds / cash management funds?
With money market funds, it’s possible to earn a higher interest rate on the cash you keep in them (compared to the base bank interest rate), in exchange for taking on a lower level of risk. The money is invested in order to generate returns. One advantage of money market funds is that the money can be withdrawn whenever you want, just like with a normal savings account. There is usually no lock-in period; however returns are not guaranteed.

Mutual Funds vs Unit Trusts vs ETFs vs moomoo Cash Plus: Benefits & Risks

Mutual Funds Unit Trusts ETFs moomoo Cash Plus (a Money Market Fund)
Versus local bank interest rates (~0.05% p.a. base rate) Tends to be higher Tends to be higher Tends to be higher Tends to be higher
Stability Depends on fund manager Depends on market conditions Depends on market conditions Relatively stable returns
Lock-in period? Some may have lock-in period No No No
How soon can I redeem this for cash? Depends, might require some processing time/paperwork Depends, might require some processing time Sell off and redeem when the stock market is open for trading Same day withdrawal upon redemption (terms apply)
Returns guaranteed? No No No No


Spotlight on moomoo Cash Plus

If you’re looking for the flexibility that money market funds offer, moomoo Cash Plus is one option that can help your idle cash grow.

If you’ve got any cash savings that aren’t invested and that you wish to keep liquid, you can stash them in moomoo Cash Plus to earn higher interest rates* than you would in a regular savings account, while retaining the flexibility to make withdrawals whenever you wish.

moomoo Cash Plus offers decent interest rates* but does not put you at the mercy of big price fluctuations that you might experience with mutual funds, unit trusts or ETFs. So, you do not need to wait for the best time to sell your shares in order to access your cash for fear of losing a lot of your money.

Because of this flexibility, moomoo Cash Plus could be an option when you’ve got cash that you’re planning to invest or re-invest when the time is right. For instance, if you just sold your shares and are waiting to re-invest your money, you can consider stashing it into moomoo Cash Plus to let it grow until the market moves in your favour. If you are saving up money to buy a house and do not want to invest it in anything risky, moomoo Cash Plus could let you earn some interest* on that money in the interim.

*Do note that returns aren’t guaranteed as they are subject to market forces

Key perks of using moomoo Cash Plus:

  • Generate returns on your idle cash with greater flexibility — You can withdraw your cash whenever you want without affecting your interest rate or returns.
  • No lock-in period — Keep your cash in the account for as much or as little time as you wish.
  • Lower risk — moomoo Cash Plus has had an excellent track record so far, and has had no negative monthly returns to date. [attach screenshot]
  • Zero subscription fees or redemption fees — The minimum investment is as little as $0.01, and you don’t have to worry about paying other fees which could eat into your gains.
  • Earn 1.6%^ p.a. with your idle cash — That’s higher than most banks’ interest rates, which are currently hovering at around 0.25%.
mutual funds vs unit trusts vs ETFs - what's the difference?
Screenshot: moomoo



moomoo Cash Plus promotion

From 1 to 31 August 2022 moomoo is running a promotion for all new and returning users*.

Deposit S$100 into your moomoo Cash Plus account, and you’ll earn S$2* cashback every day for up to 30 days. That’s $60 of “free” cash, which translates to a free cup of kopi every day for a month!

Find out how to open a moomoo Cash Plus account and claim your cashback.


*Cashback is given for a total of 30 days. T&Cs apply. This advertisement has not been reviewed by the Monetary Authority of Singapore.

^Source: moomoo app