Which is better - indexed or combined fund?
My answer: both are suitable.
Both funds have low annual charges:
- combined fund (from NTUC Income) charge about 1% annually
- indexed fund (not available yet) will charge about 0.5% annually
The difference of 0.5% is small. The combined fund is actively managed and is likely to earn more than this difference.
Both of these funds are much better than similar funds in the market where the annual charge could be 1.5% to 3% per annum (if other hidden charges are included).
I suggest that the investor can invest in the combined fund now, and decide at a later date, if you wish to switch to an indexed fund (when it becomes available).
The most important principle is:
- choose a large, well diversified fund
- look for low charges, ie 1% or less
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