Delving into funds: The differences between unit trusts and ETFs

Julie Brownlee, Fsp Invest, 04 Nov. 2015

Tags: unit trusts, etfs, unit trusts versus etfs, differences between unit trusts and etfs, investing in funds, funds,



If you’re looking to invest in funds, you have two main options to choose from: Unit trust funds and exchange traded funds (ETFs).

So what are the differences between these two types of funds?

Let’s take a closer look…



Unit trusts v ETFs difference #1: One is listed, the other is not


The first difference to note between unit trusts and ETFs is that ETFs are listed on the stock market, unit trusts are not.

This means that the price of an ETF changes throughout the day, just like other shares listed on the stock market.

On the other hand, the price of unit trusts is only given at the end of each trading day.

As ETFs are listed on the stock market, one of the ways you can invest in them is through a stock broker.


Unit trusts v ETFs difference #2: Type of management


Some unit trusts are actively managed. This means the fund manager behind the unit trust is trying to outperform its benchmark.

ETFs are passively managed. They try to replicate the performance of a benchmark, they don’t try to outperform it. There are also unit trusts that are passively managed.


Unit trusts v ETFs difference #3: How you invest


If you want to invest in ETFs, you have to do it through a stock broker, ETF provider or ETF trading platform.

With unit trusts, you can invest with the help of your financial adviser or directly through the fund manager.

There is also a difference in fees. Be sure to weigh these up before investing, ensuring you account for the costs of admin and management fees in both types of funds.

So there you have it. The differences between unit trusts and ETFs.

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