How to Invest in Mutual Funds (Singapore): Step-by-Step Guide

By
Syfe Singapore
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Mutual funds (often called unit trusts locally) pool investors’ money into professionally managed portfolios spanning equities, bonds, money market instruments, or a blend. They offer instant diversification, disciplined rebalancing, and a hands-off way to build wealth—especially if you use a Regular Savings Plan (RSP). In Singapore, funds marketed to retail investors must be authorised or recognised by MAS and be offered with a MAS-registered prospectus and Product Highlights Sheet (PHS), which help you compare options and understand risks.

This guide dives into the main types of mutual funds (equity, fixed income, money market, balanced, and index), how they compare with ETFs and fixed income, what fees matter (and how to lower them), where to buy (banks vs platforms), how to use CPFIS or SRS, and the pitfalls to avoid. By the end, you’ll know exactly how to pick mutual funds to invest in that match your goals, time horizon, and risk appetite.

Table of Content

What Are Mutual Funds (Unit Trusts) in Singapore?

A mutual fund (unit trust) pools money from many investors to buy a portfolio of securities according to a stated objective. Units are priced at Net Asset Value (NAV) once per day; you transact at the next computed NAV (not intraday). Before investing, read the Prospectus and Prospectus, Product Highlights Sheet (PHS), which summarise objectives, fees, past performance and key risks.

Mutual funds are popular as they offer diversification, professional management, and low minimums versus buying each security individually to assemble the same portfolio. Local banks and digital platforms make onboarding straightforward and support Regular Savings Plan (RSPs) that automate dollar-cost averaging.

Types of Mutual Funds

Industry education commonly groups mutual funds into five buckets: equity, fixed-income (bond), money market, balanced, and index. This classification maps neatly to Singapore offerings and is a helpful first filter for beginners.

  • Equity mutual funds target shares for long-term growth. Sub-styles include growth, value, sector funds, and dividend-based mutual funds that focus on companies with sustainable payouts.
  • Fixed-income mutual funds invest in bonds (government, investment-grade corporate, or high-yield). Duration (interest-rate sensitivity) and credit quality drive risk/return. Short-duration funds tend to cushion rate volatility.
  • Money market funds park cash in short-term, high-quality instruments (e.g., MAS bills, T-bills, deposits) and aim for stability and daily liquidity, not high returns. This is useful as a cash sleeve.
  • Balanced/asset-allocation funds mix equities and bonds in one single wrapper — convenient “all-in-one” allocations for set-and-forget investors.
  • Index funds track benchmarks at low cost. In SG these can be unlisted unit trusts or ETFs.

Mutual Funds vs ETFs vs Fixed Income: Which Fits Your Goal?

Mutual funds vs ETFs

  • Pricing & liquidity: Mutual funds transact at end-of-day NAV; ETFs trade intraday like stocks — useful for precise entries/exits or limit orders.
  • Costs: ETFs often carry lower expense ratios, while mutual funds may involve platform or sales charges depending on channel. Always compare all-in cost for your chosen platform.
  • Active vs passive: In 2024, active bond managers showed notably higher success rates versus passive peers, while active large-cap equities generally lagged. Morningstar’s Active/Passive Barometer reported >63% success for active bond managers (one-year), a big jump from 2023.

Fixed income vs mutual funds

“Fixed income” is the asset class (bonds). You can access it directly (e.g., SGS bonds or T-Bills) or via fixed-income mutual funds. Direct bonds offer known coupons/maturity, while bond funds provide diversification and manager selection but no promised principal at a set date. Choose direct fixed income for defined cashflows/stability, and bond funds for diversified, manager-guided exposure.

Singapore-Specific Rules, Documents, and Investor Protections

  • MAS requirements: Retail offers of units in a Collective Investment Scheme (CIS) must be made with a MAS-registered prospectus and PHS (unless exempt). You can also find PHS documents on MAS OPERA.
  • MoneySense guidance: MoneySense explains how unit trusts work, how NAV is quoted, and which documents to read before investing.
  • SIPs & suitability: Certain complex products are classified as Specified Investment Products (SIPs) and may require additional assessments (CAR/CKA). Check your platform’s requirements.

Fees That Matter (and How to Lower Them)

What you’ll encounter in Singapore

  • Total Expense Ratio (TER) within the fund: often ~1%–2.5% for retail share classes in SG (varies by fund type/class).
  • Platform fees: Some platforms charge 0% (e.g., FSMOne for certain tiers/segments); advisory platforms may charge ~0.25%–0.60% p.a. access fees.
  • Wrap/advisory fees: If you use an advised/managed account, expect an additional ~0.25%–1%+ p.a., depending on service levels.
  • Sales charges/loads: Bank channels promotions may incur initial sales charge for online unit trust deals. Always check current T&Cs.

How to minimise costs

  • Use channels with 0% sales charge and low (or tiered) platform fees.
  • Avoid frequent switching.
  • Compare all-in costs (TER + platform/advisory + any loads) rather than just TER.

Can I Use CPFIS or SRS to Buy Mutual Funds?

CPFIS: You may invest CPF OA/SA savings in approved List A unit trusts, subject to risk classes and limits. CPF publishes List A and performance reports; higher-risk UTs are excluded from CPFIS by design. Always verify a fund’s CPFIS eligibility before you buy.

SRS: You can invest SRS balances into unit trusts, ETFs, stocks, REITs and more via agent banks/platforms. Investment returns grow tax-deferred, and only 50% of withdrawals are taxable at retirement (specific rules apply).

How to Choose Funds: A Practical Screening Workflow

  1. State your goal & horizon.
    Growth (10+ years), income (steady dividends), or capital stability (near-term needs).
  2. Pick the right type.
    Equity for growth; fixed income for stability/income; balanced for a one-ticket mix; money market for a cash sleeve; index for low-cost passive exposure.
  3. Narrow by region/style & risk.
    Global vs Asia vs SG; dividend tilt for income; duration target in bond funds.
  4. Read the factsheet & PHS.
    Objective, benchmark, TER, holdings concentration, distribution policy (accumulating vs distributing), rolling returns. (PHS is a concise summary of key risks and terms.)
  5. Compare all-in costs.
    TER + platform/advisory + any loads. Use published platform schedules to compute expected drag.
  6. Sanity-check the channel.
    For beginners, a 0% sales charge platform with low or transparent fees and an RSP option is often ideal.

Dividend-based mutual funds: Beyond headline yield, check payout sustainability, sector concentration, and fee drag. Verify the fund’s distribution policy in the factsheet rather than just chasing the highest yield.

Portfolio Fit: Building a Simple, Diversified Mix

Depending on your risk tolerance and time horizon, you may want to consider one of these portfolio mixes:

  • Conservative (capital-first): ~20% equities / ~60% investment-grade bonds / ~20% cash-like.
    Prioritises lower volatility and steadier income; suited to short–medium horizons.
  • Balanced: ~60% equities / ~40% bonds. 
    A middle path for long-term compounding with smoother swings than equity-only.
  • Growth: ~80% equities / ~20% bonds.
    Maximises long-run upside with a modest bond ballast; best for longer horizons and higher risk tolerance.

A Single-App Alternative

With Syfe, you can achieve the same asset-class exposures (equity / bonds / cash-like) all in one app.

  • Conservative: Use Syfe’s flagship Core Portfolios for broad global equity exposure, add Income+ for diversified bonds with optional monthly payouts, and keep the remainder in Cash+ Flexi as a cash-like stabiliser.
  • Balanced: Combine Core Portfolios for equity growth with Income+ for the bond sleeve, then review and rebalance in-app on a set cadence.
  • Growth: Go heavier on equities with Core Equity100, keep a stability buffer via Income+, and add REIT+ if you want an SG-focused dividend component.

If you’d rather pick your own tickers, you can still keep everything in one place: trade US/SG/HK stocks and ETFs through Syfe Brokerage, while parking idle cash in Cash+ Flexi for convenience.

Get Started

Risks, Myths, and Mistakes to Avoid

  • Myth: “Higher dividend yield = better”
    Very high yields can signal stressed fundamentals or concentrated sector bets (e.g., heavy banks/REITs). Always check how payouts are generated (dividends vs. selling capital gains) and whether the distribution policy is sustainable.
  • Mistake: Over-diversifying duplicates
    Owning multiple funds that hold near-identical top names gives you more fees without more diversification. Compare the benchmark, top holdings and sector/region weights in each factsheet/PHS. Avoid overlap unless intentional.
  • Blind spot: Underestimating fees you don’t “see”
    A fund’s TER is deducted inside the NAV, so published performance is already after these costs. Distributors may also receive trailer fees (a share of the management fee, commonly 20–60%). On top of that, your platform or adviser can charge access/advisory fees. Always compare the all-in cost (TER + any trailer/embedded fees + platform/advisory fees + sales charges) rather than looking at TER alone.
  • Regulatory blinders: Skipping the documents (and missing changes)
    The Prospectus and Product Highlights Sheet (PHS) spell out a fund’s objectives, fees, and key risks, and managers must update them when mandates change. Download the latest versions when you invest, then set a yearly reminder to review them so you catch any updates early.

Action Checklist: From Consideration to First Purchase

Use this action checklist to match your goals to the right fund, confirm key docs and costs, and choose where to buy. Save your notes for future buys and rebalances.

  1. Clarify goal → growth / income / stability
  2. Select fund type and region/style
  3. Shortlist 3 funds; pull factsheets + PHS
  4. Compute all-in cost (TER + platform/advisory + any loads)
  5. Pick your channel (bank vs platform); set up RSP if desired
  6. Fund account (Cash/CPFIS/SRS); place first order
  7. Calendar a 6–12 month review and yearly rebalance

Conclusion

For Singapore investors, mutual funds (unit trusts) remain a powerful, regulated way to build wealth. Start by mapping your goal to the right fund type—equity for long-term growth, fixed income for stability and income, money market for cash, balanced for a one-ticket mix, and index funds for low-cost market exposure. Next, evaluate all-in cost (TER + platform/wrap + any loads) and read the PHS/Prospectus to understand the mandate, risks, and distribution policy. If you prefer automation, set up a RSP and stick with it; time in the market beats trying to time it.

In the local context, leverage CPFIS and SRS where appropriate—both can be deployed into approved funds and can enhance your long-term, tax-aware strategy. At the product level, avoid chasing headline yields or star past performers. Instead, pick funds that fit your portfolio’s role and keep costs lean. For many, a simple core of global equity index plus short-duration bond (via low-fee platforms) is enough to achieve compounding with serenity.

Syfe Cash+ Flexi: A Viable Alternative to Mutual Funds

Constructed with institutional-grade funds from Lion Global Investors, Syfe Cash+ Flexi (SGD) offers projected returns of up to 2.1% (after all fees, as of 31 Oct 2025). The portfolio focuses on higher credit quality MMFs to minimise volatility, resulting in fewer negative weeks and lower maximum weekly drawdowns.

With no minimum investment, no minimum balance required and no lock-in periods, Syfe Cash+ Flexi (SGD) provides a much more cost-efficient alternative to purchasing MMFs on your own. This ultimately means having the flexibility to make unlimited fund transfers and withdrawals in a way that works best for you.

What’s more, you can now use your Supplementary Retirement Scheme (SRS) funds to invest in Syfe Cash+ Flexi (SGD), which is a great way for you to save on taxes while making your idle money work.

Learn More

Frequently Asked Questions (FAQs)

1) Are mutual funds and unit trusts the same in Singapore?
Commonly yes in practice—many retail “funds” here are unit trusts. Focus on mandate, fees, and access channel; check MAS authorisation and the PHS.

2) What are the main types of mutual funds to consider?
Equity, fixed income, money market, balanced, and index/passive—each matches different goals and risk levels.

3) How do I find dividend-based mutual funds?
Screen for dividend or income strategies on platforms; verify distribution policy, holdings, and TER in factsheets. Avoid chasing yield alone.

4) Can I buy mutual funds with CPFIS or SRS?
Yes—CPFIS publishes eligible List A unit trusts; SRS supports unit trusts via agent banks/platforms, with 50% of withdrawals taxable at retirement.

5) What fees should I expect?
A fund’s TER (~1%–2.5% typical), potential platform/advisory fees (e.g., 0% on some brokers; ~0.25%–0.60% p.a. on advisory platforms), and sometimes sales charges (e.g., 0.85% promos). Prefer low-fee channels and avoid unnecessary switching.

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