Equity Funds
A stock fund or equity
fund is a fund that invests in stocks, also called equity securities. Stock funds can be contrasted with bond funds and money funds. Fund assets
are typically mainly in stock, with some amount of cash, which is generally
quite small, as opposed to bonds, notes, or other securities.
An equity fund (or
stock fund) invests in equities such as common and preferred shares. Equity
funds are considered to be the more risky than most other types of funds but
they provide higher returns to investors.
There are many different types of equity funds, such as the follows:
Aggressive Growth Funds: This type of funds invests in small companies and businesses that are expected to grow very fast, for maximum capital appreciation. They are very volatile and risky.
Growth Funds: They invest primarily in the stocks of companies that show high potential for growth and are expected to significantly increase in share price.
Sector Funds: They invest in a group of companies that span different market segments and industries such as Banking, Information Technology, Health Care, Auto, etc.
Small-Cap Funds: They invest in smaller companies that have low market capitalization but with potential for substantial growth.
Option Income Funds: They invest in dividend paying common stocks on which options may by written and earn premium income on it.
Global Equity Funds: They invest primarily in foreign stocks across different countries.
Diversified Equity Funds: They invest in wide variety of stocks across different industries or sectors: services, manufacturing, infrastructure, technology, etc.
Value Funds: They invest in small-cap to mid-cap companies that have sound fundamentals and are considered undervalued today.
Equity Index Funds: They seek to match the performance of the selected stock market index.
Equity Income or Dividend Yield Funds: They invest in stocks that offer attractive returns in the form of dividend.
There are many different types of equity funds, such as the follows:
Aggressive Growth Funds: This type of funds invests in small companies and businesses that are expected to grow very fast, for maximum capital appreciation. They are very volatile and risky.
Growth Funds: They invest primarily in the stocks of companies that show high potential for growth and are expected to significantly increase in share price.
Sector Funds: They invest in a group of companies that span different market segments and industries such as Banking, Information Technology, Health Care, Auto, etc.
Small-Cap Funds: They invest in smaller companies that have low market capitalization but with potential for substantial growth.
Option Income Funds: They invest in dividend paying common stocks on which options may by written and earn premium income on it.
Global Equity Funds: They invest primarily in foreign stocks across different countries.
Diversified Equity Funds: They invest in wide variety of stocks across different industries or sectors: services, manufacturing, infrastructure, technology, etc.
Value Funds: They invest in small-cap to mid-cap companies that have sound fundamentals and are considered undervalued today.
Equity Index Funds: They seek to match the performance of the selected stock market index.
Equity Income or Dividend Yield Funds: They invest in stocks that offer attractive returns in the form of dividend.
Thematic Funds: Unlike sectoral funds, thematic funds are more to
do with a particular theme and not a specific sector. For instance, an
infrastructure thematic fund invests in companies doing business with
infrastructure construction projects, steel, cement, and the like. Here the
companies may be from different sectors but are centred around a common theme. So,
in a way, as compared to sectoral funds, thematic funds investments are
broader, and thus offer more diversification than sectoral funds.