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Your guide to diversifying your portfolio with Mutual Funds
by Jean Chan | 15 October 2025 | 5 min read
Key Takeaways at a Glance
- Discover how mutual funds and unit trusts offer curated diversification across asset classes, markets, and strategies.
- Learn which types of unit trusts serve core, income, or tactical purposes in high-value portfolios.
- Understand key risk factors—from fund overlap to liquidity terms.
- Explore how Citi’s digital tools and personalized advisory simplify fund-based investing.
- Use unit trusts as part of an orchestrated, goal-aligned allocation strategy.
Introduction
For investors like you who are managing significant capital, diversification isn’t just a tactic—it’s a discipline. Mutual funds and unit trusts serve as versatile instruments for achieving this, enabling access to curated asset mixes, professional oversight, and multi-market reach. Investors can build exposure across regions and strategies with ease, supported by our team of specialists.
This article offers a strategic introduction to fund-based diversification. Future articles in this series will explore how to evaluate fund performance, the role of thematic funds, active and passive fund approaches, and more.
Although there are minor structural differences, the terms "mutual fund" and "unit trust" are generally used interchangeably (with "unit trust" being the preferred term) in Singapore’s investment landscape.
Which types of unit trusts should you consider for optimal diversification?
Instead of asking “what’s available,” ask “what gap am I solving?”
| Plug equity concentration | Use globally diversified equity mutual funds or unit trusts to reduce home bias |
| Buffer rate sensitivity | Incorporate short-duration bond funds |
| Introduce tactical alpha | Via thematic or region-specific funds |
| Add stability | Use income-generating mutual funds |
| Create exposure to niche markets | Such as REITs, ESG, or innovation-led sectors |
Your Client Advisor can help you design a portfolio with goal-based core and satellite layers, complemented by a limited tactical allocation aimed at short term opportunities.
What should you look out for when investing in mutual funds or unit trusts?
Investors often assume diversification equals safety. But exposure without oversight can lead to:
- Currency mismatches eroding gains
- Under-diversification due to fund overlap
- Volatility masking true risk-adjusted returns
How do I stay ahead?
Use of regular portfolio reviews, active monitoring, and informed selection can help mitigate these risks. Using tools that highlight overlap, fee impact, and currency exposure is key to maintaining a healthy fund mix.
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The Citi Advantage |
Citi’s advisory support includes analytical overlays that model how potential unit trust additions affect your broader portfolio—before you even commit capital.
How are we making it easier for you to invest in unit trusts?
Citibank Singapore’s tools let you scan fund performance trends, compare performance across available funds, and build investment plans—entirely via the Citi Mobile® App.
Your Client Advisor provides bespoke views built on your portfolio risk-return profile, ensuring new exposures truly diversify—not just complicate—your holdings.
What makes mutual funds and unit trusts indispensable for portfolio diversification?
Unit trusts can anchor your diversification strategy. Unit trusts should not be used as standalone instruments but as part of an orchestrated asset allocation plan. At Citi, we have the right team and tools to provide you with the infrastructure and intelligence to do this at scale.
Jean Chan | Traditional and Portfolio Specialist, Citi Wealth
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