The content of this thesis tries to show the status of the investment funds in the Republic of Croatia, examine their advantages and disadvantages as well as their characteristics. Investment funds belong to institutional investors who raise funds of the general public and, in accordance with predetermined financial targets, place them in long-term, and rarely in short-term financial instruments. Investing in investment funds has it own advantages and disadvantages. Risk dispersion, professional management, a short deadline for payment of funds and ease of investment are the benefits that more and more people today are encouraging to invest in investment funds. The variability of yields and the lack of government guarantee for invested funds are the disadvantages that will the second part of potential investors in investment funds and those less conservative led to rejection of investing. The Republic of Croatia has regulated the operation of investment funds by it's legislation and the operation of investment funds is considerably facilitated.