The difference is mostly the yearly cost. It looks small, 0.2% against 1.5%, but it is taken every year from all your money. See what it adds up to.
Your numbers
€10,000
€200
20 years
1.5%
Look for “ongoing costs” in the fund’s KID. In the EU, actively managed equity funds cost about 1.2–1.4% a year on average; in Italy they are among the most expensive.
ETF cost and entry fees (tap to change)
0.2%
0%
Some bank funds charge 1–3% on each payment. Put 0 if yours doesn’t.
In 20 years, in today’s money:
Bank fund 1.5% a year€76,303
ETF 0.2% a year€91,694
With the ETF you’d have about €15,391 more. That’s what the higher costs take, year after year, over 20 years.
€18,050lost to the fund’s costs, including the growth that money would have made
€2,659lost to the ETF’s costs
Both earn the same 7% a year before costs, which is generous to the fund: over 10 years more than 9 in 10 active European equity funds did worse than their index (SPIVA Europe, 2025). In today’s money (2% inflation), before taxes.
Why the cost matters so much
It’s taken every year, on everything: 1.5% of €50,000 is €750 this year, and again next year on a bigger amount.
It doesn’t depend on results: you pay it even in years when the fund loses money.
Active funds rarely win: to be worth it, the fund manager has to beat the index by more than the extra cost, every year. Over 10 years more than 9 in 10 don’t.
An ETF just copies the index: no star manager to pay, so it costs a fraction.
Before you sign at the bank
Ask these 5 questions
What is the total yearly cost of the fund, in %?
Are there entry or exit fees?
Is it an active fund or an index fund?
How did it do against its index over the last 10 years, after costs?
Can I buy a similar ETF or index fund through you?
Read the KID
Every fund and ETF has a KID, a 3-page official sheet. Ask for it, or search the ISIN online.
“Ongoing costs”: the yearly cost. Compare it with an ETF’s TER.
“Entry costs” and “exit costs”: paid when you put money in or take it out.
Risk indicator from 1 to 7: world equity funds and ETFs are usually 4.
Switching from a fund to an ETF
Selling a fund that has gained usually means paying tax on the gain, so check the numbers before you switch. Rules depend on your country.
Taxes change, and they vary. Tax rules change often, sometimes every year, and depend on your country, your region and your own situation. What you read here is a general summary, checked in October 2026: always check the current rules with an accountant or tax adviser before deciding.
Questions
Isn’t a professional manager better than an index?
Some years, some managers do better. But picking in advance which ones will do better for 10 or 20 years almost never works, and the extra cost is certain. Over 10 years more than 9 in 10 active European equity funds did worse than their index.
My bank says its fund is safer. Is it?
Look at the risk indicator in the KID, from 1 to 7. A world equity fund and a world equity ETF hold much the same companies and usually have the same risk. If you want less risk, there are ETFs that also hold bonds, still with low costs.
What is an index fund?
A normal fund, not traded on the stock exchange, that copies an index just like an ETF does. It has low costs too. It’s a good alternative to an ETF, especially where the tax rules favour funds.
Next: how to buy your first ETF
Step by step: choose a broker, open the account, find the ETF and make your first purchase.
Not financial advice. Educational estimates with the same constant return for both. Real fund and ETF returns differ, and investing in ETFs can lose money. No ties to any bank, broker or fund provider.
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