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Individual securities versus funds – the differences explained using the example of shares

02.04.2025

The main differences between shares and funds that investors, or anyone thinking about investing, need to be aware of.

At a glance

  • Some shares offer high potential gains, but also involve risk due to the lack of diversification. Funds spread risk by investing in a range of securities.
  • With a fund, diversification can be achieved with as little as 20 francs. Individual shares require a higher amount.
  • Gains and losses in shares strongly influence the return. These effects are reduced in a fund due to the wide distribution.

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Investors can always choose between putting their money into individual securities or into a fund. Individual securities include, for example, shares in a particular company, federal government bonds or bonds issued by a particular company.

A fund is a basket containing a number of different securities. It is usually put together with the focus on a particular area, such as a sector, region, asset class or various other priorities.

Using the example of shares and equity funds, we illustrate the key differences between individual securities and funds that investors should be aware of.

The differences between shares and equity funds at a glance

Individual shareEquity fund
Individual share
Management
Often independent management. Investors should also consider whether a share is undervalued or overvalued, i.e. whether the current price is lower or higher than the share’s estimated intrinsic value.
 Equity fund
Management
Professional management by a fund management company.
Individual share
Risk
Investing in a single security increases the risk as there is no diversification.
 Equity fund
Risk
With funds you invest in a variety of assets, for example, in different sectors, currencies or countries etc. This enables risk concentration to be reduced inexpensively. A fund is diversified even if it focuses on a single sector. This is because investment is made quickly in over 30 different companies, depending on the fund.
Individual share
Investment amount
In order to efficiently manage a diversified portfolio with over 30 securities, a higher investment amount is necessary.
 Equity fund
Investment amount
An investment can be diversified even with a relatively small amount. Investing from CHF 20 a month is enough.
Individual share
Gains and losse
Gains may be very high if the share price rises sharply – but, equally, the same also applies to losses.
 Equity fund
Gains and losses
High gains from individual shares have less effect in a fund containing lots of shares –  and it is exactly the same for losses.
Individual share
Dividend payment
Dividends are paid directly to shareholders. If investors wish for the amount to be (re)invested into shares, they often have to pay transaction costs.
 Equity fund

Dividend payment 

The dividends are either paid out (distributing fund ) or directly reinvested (accumulation fund ).
Individual share
Costs
Anyone who purchases shares independently pays a brokerage fee to the stock exchange where the security is traded – this depends on the stock exchange and order size, and can vary from five to 500 francs. Costs are usually incurred when buying and selling. In addition, there is stamp duty.
 Equity fund
Costs
When purchasing funds, you normally pay an issue commission as a percentage of the investment amount, and this is often incurred only when purchasing.
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