An investment fund is a fund in which the money of multiple investors is pooled and invested collectively. Instead of selecting individual investments yourself, you buy a participation in the fund. The fund then invests that money according to a specific strategy.
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An investment fund makes it possible to invest broadly even with a relatively small amount.
The fund is managed by a professional manager who decides what to invest in, for example shares, bonds or a combination of both. By pooling the money of many investors, diversification across multiple investments arises automatically. This can reduce risk compared to buying a single share. You usually pay fees for the management, which are incorporated into the fund. The value of your investment rises or falls in line with the performance of the underlying investments.
Short example:
Suppose you invest €1,000 in an investment fund that invests in 40 different shares. If the total value of those shares rises on average by 6% in one year, your investment grows to approximately €1,060. If the average value falls by 6%, your investment is worth approximately €940.
Disclaimer: Investing involves risks. Our analysts are not financial advisors. Always consult a professional advisor when making financial decisions. The information and tips provided on this website are based on the personal insights and experience of our analysts and are intended for educational purposes only.