Types of Equity Funds

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 as the follows:

1) 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.

2) 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.

3) 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.

4) Small-Cap Funds: They invest in smaller companies that have low market capitalization but with potential for substantial growth.

5) Option Income Funds: They invest in dividend paying common stocks on which options may by written and earn premium income on it.

6) Global Equity Funds: They invest primarily in foreign stocks across different countries.

7) Diversified Equity Funds: They invest in wide variety of stocks across different industries or sectors: services, manufacturing, infrastructure, technology, etc.

8) Value Funds: They invest in small-cap to mid-cap companies that have sound fundamentals and are considered undervalued today.

9) Equity Index Funds: They seek to match the performance of the selected stock market index.

10) Equity Income or Dividend Yield Funds: They invest in stocks that offer attractive returns in the form of dividend.

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