The fundamentals of equity fund

The equity fund is a fund having similarity to the mutual fund. With the equity fund you will have the ownership on the business. The equity fund is well known for its high return on its investment. Compared to other fund the equity always provides higher return. At the same time it has to be kept in mind that the equity fund poses high risk also.

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If you have a better understanding about the risk involved with the equity fund, you can invest your money for a better return. Here we are presenting the various types of the equity fund according to the risk factor associated with each equity fund.

Equity

Aggressive growth fund: From the name of the fund you can have an idea about the type of equity fund. Yes, under the aggressive growth fund the fund managers will invest your money aggressively on various sectors and shares irrespective of its popularity. Hence this fund becomes more volatile and prone to higher risk than other equity funds. As fund managers will invest aggressively, the fund can be invested any of the unsearched sector. Though there is chance of high return on the fund it also poses equal threat to lose your fund.

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Growth fund: The grown fund is comparatively least volatile to the previous one. The sole aim of the fund managers under this fund is to create capital appreciation. In general sense the fund managers will invest your money on certain companies and sector which has a very good chance to grow in the future. And these funds will be invested for a time period of 3 to 5 years. Speculative strategy will be the ideal formula to invest under this fund. Tough this fund will not give you a guarantee of high return, a moderate return can be expected from this fund.

Specialty fund: The specialty fund is a kind of equity fund which has been designed to invest on certain sectors only. It has got a synonym of concentrated fund. The wealth created under this fund will be invested in particular regions/companies. The rate of return on the specialty fund completely depends upon the fund where the money is invested.  To be more specific the specialty fund has been differentiated to various categories and here is a glimpse of the various funds.

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Sector fund: The sector fund is an exclusive specialty fund which is meant for investment for specific sectors. The money meant for one sector can’t be invested for another irrespective of the condition.

Foreign security fund: Under the foreign security fund the money can be invested in various foreign companies and there is absolutely no ceiling on the investment. Though it’s a foreign investment, this fund is always considered to be secure one compared to other types of the specialty fund.

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Mid cap and small cap funds: The mid cap and small cap investment is decided according to the size of the market. Companies with a capitalization of rupees less than than Rs. 2500 crores but more than Rs. 500 crores will comes under the purview of small cap and companies with capitalization of more than 500 crores will be considered as mid cap.

Equity