Unit trust and ETF

A Sunday Times article said that unit trusts are not transparent. This is not correct. The unit trust trade on its net asset value at the end of each day. The fund manager accepts your investment in cash, gives you the units, and then invest the additional cash. It creates liquidity. For a long term investor, this is a good arrangement.

A ETF trades on the price quoted on the exchange. This may be transparent and tradeable, but it may suffer from the lack of liquidity, if you wish to trade in a large volume.

Each arrangement has its advantages and disadvantages. The most important factor is the expense ratio. If the unit trust or ETF gives a low expense ratio, a long term investor will gain from it, compared to high expense funds.