An equity fund is an investment strategy that invests in stocks and other equity securities. This type of fund differs from money and bond funds, as the assets are mostly in stocks, with a small portion in cash or other securities. The assets of a stock fund typically represent the company’s ownership of stocks and other equity securities.
The price of an equity fund is determined by its net asset value, which is its total assets minus its liabilities. An equity fund is managed by a professional portfolio manager with experience in financial markets and a proven track record. Different equity funds focus on different geographic areas or different market capitalizations. They may use a growth-oriented investment strategy or a conservative investment approach.
A good equity fund should follow a strategy that maximizes its chances of making a profit. It should focus on companies with a good track record of growth and profitability. Alternatively, you may want to choose a balanced fund that holds a variety of investments in different sectors. While there are many different types of equity funds, most aim to generate long-term capital appreciation and income. Some invest in growth stocks, while others focus on value stocks and dividend-paying stocks.
Another common type of equity fund is the mid-cap fund, which invests primarily in small and mid-cap companies. Mid-cap funds are typically less volatile than large-cap funds, but offer better returns.