Investment fund and strategy fund – what are they?

Investment fund, investment strategy fund or strategy fund? We explain what they are all about.

Investment funds and strategy funds are often sold by banks to unsuspecting customers. But what are they and who benefits from them? How high are the fees and costs? What alternatives are there? We clear the jungle for you.

Investment fund explanation and definition

Simply explained, an investment fund is a collection of assets in a kind of basket. Many different investors invest in an investment fund. The investment fund is managed by a fund manager. Sometimes an entire team manages the investment fund. Either way, the investment fund is always managed for the account of the investors; in other words, the risks (fluctuations in value and loss) lie entirely with the investors.
An investment fund invests in different types of securities. An equity fund invests in equities, a bond fund invests in bonds, and so on. The fund manager manages the investment fund according to the predefined investment strategy.

The investment fund definition could therefore also read: An investment fund is a form of investment. So much for the explanation of investment funds. Everything clear up to here?

Investment fund Switzerland

By the way: The many different investors who invest in an investment fund in Switzerland could also be called a collective. Another name for investment funds in Switzerland is “collective investment”. The law that regulates investment funds and strategy funds in Switzerland is called the “Federal Act on Collective Investment Schemes” (CISA). On the one hand, the CISA aims to protect investors in investment funds in Switzerland. On the other hand, it aims to ensure the transparency and functioning of the market for collective investment schemes (investment funds in Switzerland).

What is a strategy fund?

If the investment fund invests in more than one type of security, for example in equities as well as bonds or in equities and cash, the investment fund is often called an investment strategy fund or strategy fund for short. In addition, some banks and fund managers speak of investment target funds, which is also a type of investment fund or strategy fund.

What are the investment strategies for investment funds?

Investment funds and strategy funds can be managed according to different strategies. The most common strategies for strategy funds that invest in multiple types of securities are:

  • Yield
  • Income
  • Balanced
  • Growth
  • Equity

There are thus commonly 5 investment strategies. These 5 investment strategies differ depending on the level of equity exposure, from 0% for “yield” to almost 100% for “equity”. This distribution is called asset allocation.

The ranges differ from bank to bank and from fund to fund. Also, each bank has different names for the funds and a comparison of investment funds in terms of returns is almost impossible. Each investment fund has a slightly different asset allocation and is therefore hardly comparable with another investment fund.

BEKB strategy fund

For example, the strategy fund at the cantonal banks is called “BEKB balanced strategy fund”, “SZKB balanced strategy fund” or “BEKB growth strategy fund”.

The BEKB balanced strategy fund, for example, invests 40% in equities. In addition, the BEKB Strategy Fund Balanced can also invest in bonds, gold and alternative investments.

BEKB strategy fund sustainable 60

Under the term “BEKB Strategiefonds Nachhaltig” (BEKB Sustainable Strategy Fund), BEKB offers investment funds that fulfil certain criteria with regard to sustainability. For example, BEKB strategy fund sustainable 60 states in the factsheet “The BEKB sustainability approach guarantees that investments are only made in companies that focus their activities on economic efficiency, ecological compatibility and social responsibility and that fulfil high ethical values”.

UBS investment fund and Credit Suisse investment fund

The UBS investment funds are called “UBS Strategy Fund Balanced”, “UBS Strategy Fund Yield Sustainable” or “UBS Strategy Xtra Balanced”. The product range of UBS investment funds is extremely broad, and it is rather difficult for investors to find their way through this jungle.

Credit Suisse investment funds operate under very similar names. Here, too, the range of Credit Suisse investment funds is not easy to keep track of.

ZKB investment fund

The ZKB investment funds in turn bear names such as “Swisscanto Portfolio Fund Responsible Relax”. Here, the term “ZKB investment fund” has even disappeared entirely from the name of the ZKB investment funds.

Raiffeisen investment fund

The Raiffeisen investment funds have names like “Raiffeisen Futura Strategy Invest Yield” or “Raiffeisen Strategy Invest Balanced”. The range of Raiffeisen investment funds is very broad, not to say confusing. Some Raiffeisen investment funds are geared towards sustainability, while other Raiffeisen investment funds do not carry this additional “Futura” label.

Investment funds advantages and disadvantages

Investment fund advantages

Investment fund disadvantages

Ready-made investment strategy 

With an investment strategy fund, you buy a ready-made investment strategy

Too expensive

Investment funds are very expensive. Depending on the type and provider, the total cost of the fund, known as TER, can be 2-3%.

By comparison, an ETF, a passive, exchange-traded index fund, costs around 0.20% per year. 

Reduced custody fees

Some of the in-house investment funds are held in the securities custody account at a slightly lower rate. 

No independence

Banks lack objectivity. No bank in the world will recommend anything other than their own strategy funds. Even if there were investment funds that yielded better returns, had better valuations or had lower costs.

Here, the banks are still interested in pushing in-house products into clients' securities portfolios. Because that is how the bank earns the most.

Disappointing return

The investment fund justifies the above-mentioned additional costs with the promised additional return compared to the benchmark index. However, this is not achieved in 97 out of 100 cases. A disappointing performance record. You still pay the high TER. Therefore: a bad deal for you.

Pro forma

In the case of a strategy fund, the fund manager has the possibility of significantly changing the equity and bond proportions. For example, they have the option (depending on the provider and fund) to vary the share of equities between 30 and 70% of the fund's assets. The target allocation is 45%.

If the fund manager is very pessimistic about the further development of the stock market, they could theoretically reduce the share of equities to 30%. In reality, however, they will not do this. They are much more likely to reduce the share of equities from 45 to 42 or perhaps 40%. That makes very little difference to the total return of the investment fund. They do not use the opportunities because it also means risks for him. If they are wrong and the stock market rises, they only participate with 30 instead of 45% in the upward movement.

If the stock market actually goes down, they would have protected your assets better if they had reduced to 30% euqities. (By the way: we think that going back and forth only empties your pockets anyway, it is better to strategically stick to the same share of equities, it pays off better in the long run).

But it is precisely for this asset management that you pay the expensive fund manager and their team. You should avoid this pro forma activism and certainly not co-finance it.

Issue commission and redemption fees

Fund providers may charge costs for the issue and redemption of units. Redemption commissions are rarely applied to investment funds in Switzerland. Instead, issuing commissions are charged, which can be quite steep. Depending on the provider of the investment fund, it can be 3-6 per cent. Therefore, inform yourself very carefully about these costs, which are not always transparent.

How safe are investment funds?

Investment funds can be described as safe. The same applies to strategy funds and also to ETFs. This is because the money invested in the investment fund is legally considered special assets. This means that it is safe from loss even if the fund manager goes bankrupt.

What you are not protected from, of course, is bad work by the fund manager. Investment funds are always managed for the account of the investors. If the fund manager delivers a poor return, you are not protected from this.

The only way to protect yourself from bad work by the fund and its manager is to invest in ETFs and use a digital asset manager.

Investment fund fees and costs – comparison

The fees of investment funds are summarised in the so-called TER. TER stands for “Total Expense Ratio” and is intended to represent the total costs of the investment fund in relation to the total value of the investment fund’s assets. TER is therefore always a percentage figure, in the low single digits. In addition, there is the custody fee for the safekeeping of the units of the investment fund.

In addition to the actual management fees, the TER also includes the transaction fees, the costs for legal advice, audit fees for the auditors and other operating costs. However, the management fees make up by far the largest part of the TER.

An example:

Management Fee                                        1.25% p.a.
TER: 1.40% p.a.

The difference is not always so small; an extreme example is a strategy fund of a major bank (medium equity ratio), as of mid 2022

Management Fee                                       1.58% p.a.
TER: 2.14% p.a.

So you pay well over 2% annually for this strategy fund.

Together with the custody account fees, it looks like this:

TER Investment funds2.14%
Custody fees0.25%
Total costs for management and custody2.39%

Moneyland study: These are the most favourable investment apps

The independent comparison portal examined the costs of digital asset managers in Switzerland. They found that digital investment apps are significantly cheaper than traditional asset managers. However, the apps differ considerably. And findependent is the cheapest investment app in Switzerland. The entire study is available here.

Alternatives to the investment fund

What a fund manager of an investment fund does for expensive money, you can actually also achieve with a digital asset manager. This is convincing due to significantly lower fees. The investment solutions from findependent cost a flat rate of 0.44% p.a. and include not only the management fees but also the custody fees. In addition, the TER of the ETFs are incurred, which are around 0.20%. The cost advantage compared to investment funds is massive. Instead of 2.39%, only around 0.65%.

You might think that the fees are only a fraction of the total invested assets and therefore not that important. But unfortunately this is not the case at all. Because the fees constantly eat away at your investment sum and a smaller investment sum then achieves less income and growth in value. Over time, the fees become increasingly noticeable – like a negative compound interest effect.


Investment funds and strategy funds are a relic from the time when there were no digital asset managers and investment apps. The costs of investment funds are very high compared to valid alternatives. Investment funds and strategy funds primarily benefit the banks and your bank advisor.

Simply put, the best investment fund in Switzerland is a digital asset manager and the ETFs it uses.

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