Equity Mutual Fund

An equity mutual fund is what is more popularly known as stock mutual funds. It is a common option in mutual funds. Held as either stock or cash, an equity mutual fund is mostly kept as a long-term investment. The projected yield from a equity mutual fund is mostly through capital appreciation. In certain cases, earnings can be from dividends and interests.

Equity mutual funds vary. Here are some types of equity mutual funds:

1. Index Fund: This type of equity mutual fund is set against the market index. The buying and selling of portfolio items is dependent on market rates. However, portfolio turnover is kept low. This means there is only a minimum cost in investment maintenance as the equity mutual fund is held longer.

2. Growth Fund: This type of equity mutual fund is geared towards promising companies with stellar stock performances and fast-paced growth. Profits here are often redirected back into the company as investment in its research and development. Returns are therefore seen mostly from capital gains not dividend income.

3. Value Fund: This type of equity mutual fund pertains to stock funds from stable and established companies – the old reliables of the industry. The “value” of these stocks can be projected far into the future through shareholder dividends.

4. Sector Fund or Specialized Fund: This type of equity mutual fund hones in on the different business sectors. At least a fourth of the total funds here should be put in select business sectors, such as the technology and utility sectors.