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Fund
Investierenab 13 J.
A bundle of securities managed by a fund company. There are actively managed funds (more expensive, a manager picks stocks) and passive ETFs (cheaper, they track an index).
A fund collects money from many investors and invests it as a pool in various securities – shares, bonds, property or a mix.
Active funds: a fund manager selects the investments and tries to beat the market. Costs: often 1.5–2.5% per year (TER). Problem: over 90% of active funds fail to beat their benchmark index in the long run.
Passive funds (ETFs): simply track an index (e.g. MSCI World). No active selection, but costs of only 0.1–0.5% per year. The better choice for most private investors.
Did you know? For years, Germany's consumer testing foundation Stiftung Warentest has recommended ETFs rather than active funds to private investors: cheaper, more transparent and usually more successful in the long run.
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