The topic of this paper is a review of the development of investment funds in the Republic of Croatia. Investment funds, in modern times, are no longer just an alternative investment option as in previous years in addition to the classic forms of savings and investments in banks and other financial institutions. Increasingly, because of their advantages and opportunities for diversification, they set an attractive investment category for all potential investors. As markets changes, globalization enables the presence and openness to these same markets, the financial literacy of investors is increasing faced with challenges and threats of a wide range (financial, economic and debt crisis) and so is the awareness of preserving the income of investors with the look into the future and possibilities of increasing accumulated income through the expected return, i.e. the profit that investment funds can make. The aim of this paper is to show how investment funds in the Republic of Croatia are developing under different influences, what are the trends and historical events such as financial crises, Croatia's membership in the European Union and other factors, influences on their establishment, type and exposure. Their propensity for risk and return contributed to this. In addition to the concept of investment funds, the paper will present a historical overview of the establishment of investment funds in the Republic of Croatia as well as the number of investment fund management companies, types of investment funds and the movement of assets and returns through individual periods. The causes of these developments and how they affected investors will be explained. The paper will present the legislative and regulatory framework under which investment funds will be undermined, as well as related institutions that aim to promote investment funds while informing investors and protecting them.