In short
A fund is like a big basket into which many people put money to buy small pieces of many companies. If one company does badly, only a small part is affected.
Last checked: 11 October 2026 · 5 min read · RenteKannMehr editorial team
Now in more detail
A fund collects the money of many investors and invests it in many individual securities. This spreads the risk: if a single company fails, that affects only a small part of the assets.
Active fund or ETF?
| Actively managed fund | ETF (exchange-traded index fund) | |
|---|---|---|
| Approach | A management team selects securities | Tracks an index as closely as possible |
| Ongoing costs | usually higher | usually lower |
| Aim | to do better than the market | market return minus costs |
| Risk | market risk and selection risk | market risk |
Whether an active fund makes up for its cost disadvantage cannot be known in advance. Only the costs are certain – which is why it is worth looking at them.
Diversification is the most important protection
A broadly diversified equity fund contains hundreds or thousands of companies from many countries and sectors. This does not protect against falls in the market as a whole, but it does protect against the total failure of individual holdings.
Funds in the retirement savings account
In the new retirement savings account (Altersvorsorgedepot), from 2027 the money may be invested in, among other things, investment funds that meet the European standard (UCITS, in German OGAW) – this includes most ETFs offered in Germany. With the standard account (Standarddepot), the provider pre-selects two funds from different risk classes. More on this: The retirement savings account.
Segregated fund assets (Sondervermögen)
Fund assets are legally separate from the assets of the fund company. If the company becomes insolvent, the fund assets still belong to the investors. This does not protect against price losses.
No recommendation
We deliberately do not name individual funds or providers. Which investment suits you depends on your situation, your time horizon and your willingness to take risk.
More questions?
If you have more questions, talk to a personal adviser near you. They can look at your situation in detail. Asking is free and without obligation.