What is a mutual fund?
A mutual fund is a fund where many people put money into one pool, which a manager invests in stocks or bonds on their behalf. You buy a unit and thereby own a small slice of the whole basket. In Denmark the classic mutual fund is called an investeringsforening; it is built for the Danish tax system and is usually bought through your bank. It resembles an ETF — but is often more expensive.
How it works
Imagine 10,000 people each put 1,000 into a pool. The pool — 10 million — is used to buy 300 different stocks. You own one ten-thousandth of everything. If the 300 stocks rise 5%, your unit rises 5% — minus the fund's costs.
The price of a unit is called the net asset value: the fund's total assets divided by the number of units. It is usually calculated once or a few times a day.
Mutual fund or ETF?
| Classic mutual fund | ETF | |
|---|---|---|
| Yearly costs | Typically 0.3–1.5% | Typically 0.05–0.4% |
| Traded | Through the bank, often at the day's net asset value | On the exchange all day |
| Tax (Denmark) | Distributing equity funds: taxed on sale as share income | Mark-to-market (share income if on the positive list) |
| Active or passive | Both exist | Almost always passive |
The big advantage of Danish distributing equity funds is tax: you only pay when you sell (realisation taxation). The big disadvantage is the price. Do the sums on both before choosing.
What to look for
- Yearly costs — in Denmark called ÅOP, the counterpart of TER. Under 0.5% is cheap for a Danish fund.
- Active or passive — does it follow an index, or does a manager pick stocks? Passive is cheapest.
- Distributing or accumulating — this decides the tax. See accumulating / distributing.
The typical beginner's mistake
Buying the fund the bank suggests without looking at the yearly cost. 1.2% a year for 25 years eats around a quarter of the final sum. Ask for the cost figure and compare with an ETF tracking the same index.
How you see it in Kiggo
Kiggo recognises funds and shows them differently from stocks: which index they follow, costs, whether they are accumulating or distributing, and the ten largest stocks in the basket. Kiggo recommends no particular funds — the checklist is there so you can compare yourself.
Related terms
Frequently asked questions
Is a mutual fund the same as an ETF?
Almost. Both own a basket of securities on your behalf. An ETF trades on the exchange all day and is usually cheaper; a classic mutual fund trades through the bank and, in Denmark, is often simpler tax-wise.
What is a unit?
Your proof of ownership of a share of the fund — the thing you actually buy and sell. It corresponds to a share in the fund.
Can a mutual fund go bankrupt?
The fund's assets are kept separate from the bank and the manager. If the fund closes, the securities are sold and the money paid out. You can lose on falling prices, not on the manager going under.
Kiggo explains — Kiggo does not advise. We never tell you what to buy or sell, and key figures can only be compared between companies in the same industry. The decision is yours. Last updated 2026-09-23.
Written by Claus Frisch, founder of Kiggo. Not an adviser, not a bank — Kiggo explains, you decide.
