Equity funds are a kind of mutual fund designed specifically for investing in stocks. Whether they are passively or actively managed, equity funds are private investment funds that buy ownership through the purchase of company stocks. Equity funds often focus investments on regions, industries, countries and specific investment styles. To reduce risk, selecting a diverse range of investments is always a wise course of action.
How does an equity fund work?
In many cases, equity funds are managed by expert fund managers. These financial specialists make decisions on what stocks to buy and where to invest after conducting research and completing analysis. Any gains made by investors always depend on how the stocks purchased by the fund manager perform, and stock values can either decrease or increase in value.
On account of the diversification involved, equity funds are often considered a lower-risk option compared to other kinds of funds, as the investments chosen typically include a wide selection of different companies.
The purpose of equity funds
The goal of an equity fund is to deliver a continuous flow of profits to investors. To achieve this result, the fund manager will usually buy stocks and shares in smaller companies that, in their expert opinion, have the potential for growth. Alternatively, an equity fund may seek out dependable investments that regularly pay dividends.
Are you looking for investment advice in Chester and Shropshire?
If you’re looking to dip your toe in the water of investing and are interested in equity funds and other options, you can count on Hartey Wealth Management. Contact us today for further information.