A stock fund, or equity fund, is a fund that invests in stocks, also called equity securities. Stock funds can be contrasted with

bond fund A bond fund or debt fund is a fund that invests in bonds, or other debt securities. Bond funds can be contrasted with stock funds and money funds. Bond funds typically pay periodic dividends that include interest payments on the fund's underlyin ...

s and

money fund A money market fund (also called a money market mutual fund) is an open-ended mutual fund that invests in short-term debt securities such as US Treasury bills and commercial paper. Money market funds are managed with the goal of maintaining a h ...

s. Fund assets are typically mainly in stock, with some amount of

cash In economics, cash is money in the physical form of currency, such as banknotes and coins. In bookkeeping and financial accounting, cash is current assets comprising currency or currency equivalents that can be accessed immediately or near-imm ...

, which is generally quite small, as opposed to

bond Bond or bonds may refer to: Common meanings * Bond (finance), a type of debt security * Bail bond, a commercial third-party guarantor of surety bonds in the United States * Chemical bond, the attraction of atoms, ions or molecules to form chemical ...

s, notes, or other securities. This may be a mutual fund or

exchange-traded fund An exchange-traded fund (ETF) is a type of investment fund and exchange-traded product, i.e. they are traded on stock exchanges. ETFs are similar in many ways to mutual funds, except that ETFs are bought and sold from other owners throughout the ...

. The objective of an equity fund is long-term growth through capital gains, although historically dividends have also been an important source of total return. Specific equity funds may focus on a certain sector of the market or may be geared toward a certain level of risk. Stock funds can be distinguished by several properties. Funds may have a specific style, for example, value or growth. Funds may invest in solely the securities from one country, or from many countries. Funds may focus on some size of company, that is, small-cap, large-cap, ''et cetera''. Funds which involve some component of stock picking are said to be

actively managed Active management (also called ''active investing'') is an approach to investing. In an actively managed portfolio of investments, the investor selects the investments that make up the portfolio. Active management is often compared to passive man ...

, whereas index funds try as well as possible to mirror specific

stock market indices In finance, a stock index, or stock market index, is an index that measures a stock market, or a subset of the stock market, that helps investors compare current stock price levels with past prices to calculate market performance. Two of the ...

Fund types

Index fund

Index funds invest in securities to mirror a market index, such as the

S&P 500 The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 large companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices. As of ...

. An index fund buys and sells securities in a manner that mirrors the composition of the selected index. The fund's performance tracks the underlying index's performance. The turnover of securities in an index fund's portfolio is minimal. As a result, an index fund generally has lower management costs than other types of funds.

Growth fund

A growth fund invests in the stock of companies that are growing rapidly. Growth companies tend to reinvest all or most of their profits for research and development rather than pay dividends. Growth funds are focused on generating capital gains rather than income.

Value fund

This is a fund that invests in "value" stocks. Companies rated as value stocks usually are older, established businesses that pay dividends.

Sector fund

A fund that invests in one area of industry is called a sector fund. Most sector funds have a minimum of 25% of their assets invested in its specialty. These funds offer high appreciation potential, but may also pose higher risks to the investor. Examples include gold funds (gold mining stock), technology funds, and utility funds.

Income fund

An equity income fund stresses current income over growth. The funds objective may be accomplished by investing in the stocks of companies with long histories of dividend payments, such as utility stocks, blue-chip stocks, and preferred stocks. Option income funds invest in securities on which options may be written and earn premium income from writing options. They may also earn capital gains from trading options at a profit. These funds seek to increase total return by adding income generated by the options to appreciation on the securities held in the portfolio.

Balanced fund

Balanced Funds invest in stocks for appreciation and bonds for income. The goal is to provide a regular income payment to the fund holder, while increasing its principal...

Asset allocation fund

A fund that owns stocks and a substantial amount of assets other than stocks is considered an asset allocation fund. These funds split investments between growth stocks, income stocks/bonds, and money market instruments or cash for stability. A fund that switches between asset classes based on predictions of future returns is called a tactical allocation fund. Other funds may maintain a more or less constant proportion of assets, due to the belief that such prediction is not reliable.

Fund of funds

"Fund of funds" implies that the assets of a fund are other funds. The other funds may be stock funds, in which case the original fund can be called "fund of stock funds". See

fund of funds A "fund of funds" (FOF) is an investment strategy of holding a portfolio of other investment funds rather than investing directly in stocks, bonds or other securities. This type of investing is often referred to as multi-manager investment. A f ...

Hedge funds

"Hedge fund" is a legal structure. Hedge funds often trade stocks but may trade or invest in anything else depending on the fund. This is done to reduce the risk of investments in stocks.

References

{{Authority control Equity securities fi:Osakerahasto