The Fee Gap Widens
One of the most visible trends in Singapore’s mutual fund market in 2026 is the widening cost difference between passive index funds and actively managed unit trusts. A typical Singapore-listed equity index fund now charges an annual expense ratio of 0.15% to 0.35%, while many active unit trusts still levy 1.2% to 1.8% per year, excluding sales charges. Over a 20-year investment horizon, this gap can reduce final returns by tens of thousands of Singapore dollars.
According to the latest SGX market data published in 2026, trading activity in Singapore-domiciled ETFs has risen sharply, with several index products recording double-digit percentage growth in assets under management. You can access the updated statistics on the Singapore Exchange website. The shift is largely driven by fee-conscious retail investors who have become more aware of the long-term impact of costs.
Performance Realities and the Active Management Debate
While active managers argue that skill can outperform benchmarks, the actual track record in Singapore has been mixed. Over the past five years, the majority of actively managed global equity funds sold to retail investors have underperformed their benchmarks after fees. This is consistent with global evidence and has pushed more Singaporeans toward passive strategies.
However, active management still has a role in less efficient asset classes, such as emerging market debt, small-cap equities, and alternative income strategies. In these segments, skilled managers may add value through credit analysis or local market access. The key for investors is to understand where active management is worth paying for and where low-cost indexing is sufficient.
CPFIS and SRS Are Accelerating the Shift
The Central Provident Fund Investment Scheme (CPFIS) and Supplementary Retirement Scheme (SRS) have become important battlegrounds for fund providers. Because CPFIS-eligible funds must meet strict criteria, many high-cost active funds have been removed or redesigned. This has opened the door for lower-cost index funds and ETFs to gain shelf space.
In 2026, CPF members can choose from a narrower but more cost-competitive list of unit trusts and ETFs for their Ordinary Account and Special Account savings. The CPF Board provides an updated list of eligible investments, including expense ratios and risk classifications, on its official website. This transparency has made it easier for investors to compare options.
How Retail Investors Should Position in 2026
Given the fee gap and performance data, many financial advisors in Singapore now recommend a core-satellite approach: a low-cost index fund core for broad market exposure, supplemented by selective active funds or thematic ETFs where an investor has a strong conviction. This strategy balances cost efficiency with the potential for outperformance in targeted areas.
Before investing, retail investors should review the fund’s prospectus, total expense ratio, benchmark, and historical tracking difference. They should also consider whether the fund is suitable for their investment horizon and risk tolerance. With the increasing availability of digital comparison tools, conducting this due diligence has never been easier.
