What Is an Equity Fund?

Posted By : Aubrey Mead , on Jul, 2018

 

An equity fund is a type of mutual fund that only invests in stocks. It will be either passively or actively managed and is also often called a stock fund.

The stock mutual funds are usually categorized based on the size of the company, the investment type of the holdings within the portfolio and location.

Categorization of Equity Funds

Market capitalization is what will determine the size of any given equity fund. It is the investment style that will be used to categorize the equity mutual funds, which is seen in the fund’s stock holdings.

An additional classification for equity funds is whether it is international or domestic. These can be single-country, regional or broad market funds. There are some specialty equity funds that target certain business sectors, such as commodities, real estate or healthcare, among others.

Why Equity Funds Are the Ideal Investment Vehicle

There are several reasons equity funds make smart investment vehicles for those who aren’t as experienced in investing or for those who don’t have much capital to invest with. As a result, an equity fund can make a practical investment for virtually anyone.

One of the reasons these are such appealing investments is because they don’t carry much risk. This reduced risk is thanks to the diversification of the fund’s portfolio and the small amount of capital needed to purchase or buy into the equity funds.

If you would like more information about equity funds or have questions about making an investment, it is a good idea to work with a professional. They can ensure you are confident in the investments you make.

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