Equity Mutual Funds

Equity mutual funds are popular mutual fund investments. These are held as cash or stock, and most equity mutual funds are held for the long run. These funds are projected for long-term growth, which means that returns are often seen through capital appreciation. Investors may also earn from interest and dividends from the equity mutual funds.

There are different kinds of equity mutual funds. Here are some of them:

1. Index fund - This type of fund is based on the market index. Stocks are bought and sold based on the selected market index. This type of equity mutual funds offers low investment maintenance costs because portfolio turnover is kept to the minimum. Stocks are also held longer.

2. Value fund - This type of equity mutual funds refers to stocks from old and established companies. The value of this type of funds reaches far into the future. Often, the investor opts for this type of fund if he or she wants to enjoy company dividends.

3. Growth fund -This type of equity mutual funds refers to funds invested in up-and-coming companies that are growing at a fast pace. With this type of fund, the fund company should be geared towards yielding capital gains, instead of dividend income. This is because for these up-and-coming companies, profits are often reinvested into the company for research and development, instead of being given out as dividends.

4. Sector fund or specialized fund - This type of equity mutual funds focuses on certain business sectors. At least 25% of funds need to be invested in the selected sector.