Investing can be an exciting journey, especially for beginners. Over the long term, it can also be highly rewarding! But with so many options available, choosing the right investment path can feel overwhelming.
This is where investment funds often come into play. Widely recognized, these funds offer an accessible way to enter financial markets, even for those without expertise. In an increasingly complex world, the best investment funds provide a solid and relatively safe choice for returns, including for those new to the stock market.
This article dives deep into the world of investment funds. We will discuss our top three picks for the best investment funds in 2025 and provide you with the tools and insights needed to make smart, informed investment decisions. By the end, you'll know our top selections and understand whether you should invest in mutual funds or consider ETFs.
Latest update: July 2, 2025 – The name of the Actiam Sustainable Index Equity Fund World has been changed to Cardano IND Global. The ISIN code and fund contents remain unchanged. Originally published in 2023.
Why Choose Investment Funds?
The best investment funds have grown in popularity in recent years, and for good reason. They offer a range of benefits for both novice and experienced investors, simplifying and optimizing the investment process. Let's explore some of the key reasons investors choose mutual funds.
Convenience and Diversification
One of the biggest advantages of investment funds is the ease of diversification. With a single purchase, you can potentially gain exposure to thousands of companies.
This means you don't have to buy each individual stock or bond, which can be both time-consuming and costly. Instead, you buy or sell a multitude of shares in one transaction. Furthermore, diversification helps spread your risk.
If one company performs poorly, the loss may be offset by better performances from other companies in the fund. However, it's important to realize that not all investment funds offer the same degree of diversification. Some funds may focus on specific sectors or regions, so doing your homework before investing is essential.
Professional Management and Economies of Scale
Investment funds are managed by professional fund managers who closely monitor the market and make decisions based on extensive research and analysis. This allows you to benefit from their expertise without having to conduct hours of research yourself.
Moreover, due to their size, investment funds can achieve economies of scale. This can lead to lower transaction costs and better access to certain markets.
It's also worth noting that index funds, which track a specific market index, often have lower costs than actively managed funds. This is because they follow a passive investment strategy and do not attempt to "beat the market."
Generally, these types of passively managed funds also perform significantly better than actively managed funds, largely due to the higher costs associated with the active management of a fund.
What Is the Difference Between a Mutual Fund and an ETF?
Mutual funds and ETFs are both popular investment vehicles, but they have some crucial differences. A mutual fund is a collection of various investments like stocks, bonds, and cash, managed by a professional money manager.
It offers diversification by spreading your investment across different types of assets, which helps minimize risk. In contrast, ETFs, or Exchange-Traded Funds, are investment funds that are traded on a stock exchange, just like shares. They aim to replicate the performance of a specific index as closely as possible and are therefore often called 'trackers'.
While mutual funds are actively managed by experts who decide which investments to include in the fund, ETFs are generally passively managed. This means they simply try to mimic the performance of a given index.
This active management of mutual funds often results in higher costs compared to ETFs. Furthermore, mutual funds are traded only once per day, at the end of the trading session, whereas ETFs can be bought and sold throughout the trading day, making ETFs much more flexible.
Another distinction is their investment methodology. There are physical ETFs that actually purchase the assets they track, and synthetic ETFs that use derivatives to replicate an index's return. This can mean synthetic ETFs carry a higher risk than physical ETFs. We always prefer physical ETFs.
In short, while both mutual funds and ETFs offer investors the ability to diversify and invest in a wide range of assets, there are clear differences in cost, management style, flexibility, and risk between the two. The choice between them depends on individual preferences, investment goals, and your risk tolerance. Explore more strategies for building a diversified portfolio.
How to Choose an Investment Fund?
When selecting an investment fund, such as an index fund, there are several factors investors should consider. Let's discuss some of the most important aspects:
Past Performance
When choosing an index fund, it's important to look at its past performance. While this offers no guarantee of future results, it can indicate how the fund has behaved under different market conditions.
However, as any experienced investor will confirm, past results are not a reliable indicator of future outcomes. Markets change, and unforeseen events can impact a fund's performance.
Therefore, it is essential not to rely solely on historical data but also to consider current market conditions, the fund's strategy, and other relevant factors when making investment decisions.
Cost Structure
The cost structure of an index fund is a crucial factor to consider. Especially over the long term, a few percentage points in costs can have a huge effect on the return you ultimately achieve.
Low costs can make a significant difference to an investor's final return. For example, the Vanguard S&P 500 UCITS ETF is a fund with very low costs, namely an ongoing charge of just 0.07%.
However, this is an ETF, not a mutual fund. Generally, ETFs are passively managed, have lower costs, and often deliver higher returns—but not always. This is the rationale behind this article on the best investment funds (there are very few that generate sufficient returns to cover their higher costs).
Fund Strategy and Management
The fund's strategy and management are also important. Some funds follow a passive management technique, while others are actively managed. The choice between these approaches depends on the investor's goals and risk tolerance.
Top 3 Best Investment Funds
Below, we present a selection of the top three best investment funds that we particularly value. In compiling this list, we looked at three crucial factors every investor should consider: return, cost structure, and strategy.
| Rank | Investment Fund | Average Return | Annual Cost |
|---|---|---|---|
| 1 | Northern Trust UCITS FGR Fund – World Custom ESG | 11% | 0.15% |
| 2 | Cardano IND Global (formerly: ACTIAM Sustainable Index Equity Fund World) | 10.5% | 0.08% |
| 3 | BNP Paribas OBAM | 13% | 0.66% |
Read more about the top 3 best investment funds:
Best Investment Fund #1: Northern Trust UCITS FGR Fund – World Custom ESG
For us, one investment fund clearly stands out as the best: the Northern Trust UCITS FGR Fund – World Custom ESG. We analyze the fund based on the pillars discussed above.
Past Performance
The Northern Trust UCITS FGR Fund – World Custom ESG has built an impressive track record over the past five years.
The fund has achieved an average annual return of 11%, making it an attractive choice for investors seeking consistent performance. This return is a clear indication of the effectiveness of the fund's strategy and management.
Cost Structure
This fund is also attractive due to its low costs. You pay only 0.15% per year in fees. This is beneficial because high costs can significantly reduce your profits. Plus, there are no hidden costs like dividend leakage, meaning no unexpected loss of capital.
Fund Strategy and Management
This fund selects companies from around the world to invest in, primarily from North America, Europe, and Asia. It focuses on various sectors such as technology, banking, and healthcare.
What's special is that they also consider ESG factors. ESG stands for Environmental, Social, and Governance. This means they don't just look at a company's profits but also whether it is good for the planet, its people, and is run ethically.
They exclude companies that do not meet these standards, but this applies to only about 4% of all companies they could invest in. So, by putting your money into this fund, you know you are investing in companies that do good and perform well.
These Dutch funds, or NT Funds, are exclusively available through the major Dutch banks ABN AMRO, ING, and Rabobank.
Best Investment Fund #2: Cardano IND Global (formerly: ACTIAM Sustainable Index Equity Fund World)
The second-best investment fund, in our opinion, is the Cardano IND Global (formerly ACTIAM Sustainable Index Equity Fund World). This fund earns its second place in our top three.
Past Performance
The fund (under its previous name) has shown impressive returns in recent years.
With an average annual return of 10.5%, the fund has consistently delivered strong performance. This shows that the fund not only makes sustainable choices but also performs well financially, making it an attractive option for investors seeking both ethical and financial returns.
Cost Structure
A notable feature of this fund is its very low cost structure. With ongoing costs of just 0.08% per year, it offers one of the most cost-efficient options on the market.
Like the previous NT fund, this fund is not subject to dividend leakage, meaning investors do not lose money unexpectedly to hidden costs.
Fund Strategy and Management
The fund follows the MSCI World index, meaning it invests in companies from around the globe. However, this fund is stricter in its selection. Of the 1,516 companies it can choose from, only 1,251 remain.
This is because the fund excludes companies that do not meet certain sustainability criteria. The companies in this fund are primarily based in North America (72%), Europe (18%), and Asia (10%).
The largest sectors are technology, financial services, and healthcare. This means the fund chooses a mix of companies from different parts of the world and from various sectors, but always with a focus on sustainability. Investing in this fund means supporting companies that are both financially strong and act responsibly.
The fund, now named Cardano IND Global, is tradable via certain brokers. Its ISIN code is: NL0011309349.
Best Investment Fund #3: BNP Paribas OBAM
Last in our top three best investment funds is the BNP Paribas OBAM. Despite its significantly higher ongoing costs, the fund's strong performance justifies the higher expense for some investors.
Past Performance
Last but not least, the BNP Paribas OBAM fund has an impressive track record. Over a three-year period, the fund has achieved an average return of 13%. This illustrates the fund's strong performance and makes it an attractive choice.
Cost Structure
The BNP Paribas OBAM fund has ongoing costs of 0.66% per year. On top of this, there is a 0.50% annual management fee and entry/exit costs of 0.25%. Although this is much higher than some passive index funds, the strong performance and active management strategy of the fund justify these costs for many investors.
Please note that if you are investing for the long term, this is a high percentage that can significantly eat into your profits over the medium term! Historical performance is no guarantee of future results.
Fund Strategy and Management
OBAM, founded in 1936 and listed on the Dutch exchange since 1954, has a rich history and over 80 years of experience in global investing. The fund chooses a global allocation, not forgetting emerging markets.
The core of their investment philosophy focuses on companies with unique market positions, high and stable cash flow, and visible growth potential. The ultimate goal is to invest in enterprises that offer a favorable risk-return profile over the long term.
OBAM's investment team is convinced of their approach and therefore chooses an active investment strategy. They look forward, with a horizon of about 3 to 5 years. Interestingly, they are not strictly guided by their benchmark, the MSCI All Country World (NR), but chart their own course.
Their approach is bottom-up, aiming for a balanced portfolio with an attractive risk-return profile. They focus on recognizing global growth themes and structural changes within sectors, then selecting the most promising business models.
OBAM's team consists of dedicated portfolio managers with extensive experience in global investing. They maintain an independent investment policy and are supported by their own Board of Supervisors that oversees the team and its policies.
OBAM N.V. is less accessible to the general public. Orders can be placed via Allfunds or directly with the Transfer Agent (BNP Paribas Securities Services S.C.A., Luxembourg branch). The ISIN code is: NL0015000X31. Get advanced methods for accessing a wider range of investment vehicles.
Which Investment Fund Should You Choose?
Review the different investment funds carefully and compare them, for example, with the best ETFs. Depending on your personal financial situation and investment goal(s), the best investment fund for you might not be the one we ranked number one, or ETFs might suit you better. A mix of both is also a possibility.
Frequently Asked Questions
What are investment funds?
Investment funds are managed by professional fund managers who closely monitor the market and make decisions based on extensive research and analysis. This means you can benefit from their expertise without having to do hours of research yourself.
Why invest in investment funds?
Investment funds offer a range of benefits for both beginner and experienced investors that simplify and optimize the investment process. The main reasons are convenience and diversification, professional management, and economies of scale.
What is the difference between a mutual fund and an ETF?
The difference between a mutual fund and an ETF is that mutual funds are actively managed by experts who decide which investments to include in the fund, while ETFs are generally passively managed and track an index.
What are the best investment funds?
The top 3 best investment funds are: 1. Northern Trust UCITS FGR Fund – World Custom ESG, 2. Cardano IND Global (formerly ACTIAM Sustainable Index Equity Fund World), and 3. BNP Paribas OBAM. You can read why we think these are the best funds in the detailed article above.
How do I choose an investment fund?
Depending on your personal financial situation and investment goals, the best fund for you might not be the one ranked number one in our article. It's important to consider factors like costs, strategy, and your own risk tolerance before deciding. Conducting thorough research is key.