Mutual funds in Switzerland are typically organised as SICAVs or contractual funds (FCPs), in Germany as Investmentfonds and in the EU under the UCITS framework. They are priced once per day at net asset value (NAV) and bought and sold directly with the fund company or via a bank platform. Active mutual funds aim to beat a benchmark; passive (index) funds aim to track one.
Costs are the single biggest determinant of long-term net performance. A typical active mutual fund charges 1.0–1.8% per year (the total expense ratio, TER) plus a one-off entry fee of 2–5%. Over 30 years, a 1.5% annual fee differential compounds into a wealth gap of roughly 30%. Index funds and ETFs typically charge 0.05–0.30% and have largely displaced active funds in retail portfolios.
Mutual funds are well-suited to investors who want professional management, broad diversification and access to asset classes (emerging markets, high yield, private equity feeders) that are hard to replicate directly. Pay attention to the TER, the benchmark index, the manager's tenure and the fund's after-fee record versus that benchmark over at least five years.
An investor buys CHF 20,000 of a Swiss active equity mutual fund with TER 1.6% and 3% entry fee. Year 1 cost: CHF 600 entry + CHF 320 management = CHF 920, or 4.6%. The fund must outperform its index by 4.6% just to break even with a 0.20% TER ETF.