INVESTING · 3 min read

ETFs vs investment funds: what your bank does not tell you

Published 5 March 2026 · Updated 20 July 2026

When you ask your bank "how should I invest?", the answer is almost always the same: an in-house investment fund. That is no accident — and it is generally not the best answer for you.

The difference in one sentence

An active fund employs managers who try to beat the market and charges 1.5% to 2% in annual fees (TER); an ETF simply replicates an index — for instance the world's 1'500 largest companies — for 0.1% to 0.5% a year. The academic research is consistent: after fees, the vast majority of active funds do worse than their index over 10–15 years (S&P's SPIVA studies, published every year).

What the fees really cost you

Annual fees look tiny. Compounded over 20 years, they are enormous. Illustrative example: CHF 100'000 invested for 20 years, gross return of 5% a year.

A gap of more than CHF 60'000, without taking a single franc of additional risk — fees alone. That is the figure your bank adviser will never lead with.

Why your bank pushes its funds

• In-house funds generate recurring management fees for the bank.
• Some third-party funds pay retrocessions back to the distributor — a documented conflict of interest, which Swiss case law in fact requires to be returned to the client on request.
• An ETF bought on the stock exchange earns the bank only minimal brokerage fees: it has no place in its sales pitch.

How to start properly

• Choose a low-fee broker (Swiss or foreign) rather than your bank's management mandate.
• Favour broadly diversified UCITS ETFs (whole world), physically replicated, with a TER below 0.3%.
• Think about your pillar 3a too: online 3a foundations invested in ETFs charge total fees of around 0.4–0.5%, against more than 1% for many bank 3a funds.
• Invest regularly (every month), keep a horizon of 10 years or more, and ignore short-term swings.