Part 7/11:

• ETFs: Generally boast lower expense ratios, often under 1%. This is because most ETFs are passively managed index funds that simply track a benchmark. For example, if you invest SGD 100, less than SGD 1 annually might go toward management fees.

• Mutual Funds: Tend to have higher management fees, ranging from 1% to 2%. This higher fee reflects active management by fund professionals aiming to outperform the market. While active managers can potentially generate higher returns, they also carry the risk of underperforming the benchmark.

Long-term Impact: Over many years, these fees can significantly eat into returns. Passive ETFs are often favored for their lower costs, especially for investors seeking market-mirroring performance over time.