What About Equity Fund.

PostDateIcon June 21st, 2010 | PostAuthorIcon Author: Henry | PostEditIcon Edit

Definition of Equity Funds.
“Mutual funds and stock market are directly related with each others. Fund manag
er of most of mutual funds invest the share holders equity in stock market, henc
e they are also called Equity Funds.”
The investment made by any mutual funds is mostly is in stock market. The intel
ligent fund managers just don’t decide to invest in any old stock that they find
attractive. There are different type of mutual funds in the market for investme
nt in which mutual fund invest, the fund which invest on large scale is called l
arge-cap stocks, some called small-cap fund and some are called mid-cap stocks.
What About Equity Fund
How can we define “Cap”. “Cap” is a breaker that uses to limitize some thing or
some mechanism and this term is specifically used in stock market for market cap
italization. Normally in Wall Street the size of a company is measured by its ma
rket capitalization.
In stock market in U.S the large cap stocks are known as best performing compani
es and have billion of dollars of market capitalization. The small-cap stocks ar
e also have worth in several hundred million dollars, either they are newer or t
hey are upcoming firms. And in between both these are Mid-cap stocks.
Like the stocks, mutual funds are also categories by the market capitalization o
f the stocks that they hold in their portfolios. How large cap stock is big and
how. Different formulae are here. But the guideline is here.
Large-cap stock greater than $ 5 Billions.
Mid-cap stocks are between the $500 millions to $ 5 billions.
Small-cap stocks are below the $ 5 millions.
In mutual funds usually equity fund manager adopt a style among three used in ma
rket, of stock picking when they decide to invest for their portfolios. Some equ
ity fund manager emphasis on “value” of the stocks and they are always in search
of stocks that are undervalue compared to other similar companies. Most often t
he prices of these stocks go down due to market conditions as investors do not t
ake interest about the potential of the stocks of these companies.
Most of equity fund manager adopt an approach that is attached with the “growth”
for stock picking for the investment in portfolio. The equity fund manager made
search and try to find the stocks of whose growth is better compared to other c
ompetitor or better than the market as a whole. The stocks that show rapid growt
h are preferred by the equity funds to buy, well known and established corporati
on are often best choice.
The third and well known approach adopted by intelligent equity fund managers is
called Blend approach. In this approach equity fund manager gathers both types
of stock by “value” and “growth” to build a better portfolio by which more earni
ng can be added.
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PostCategoryIcon Posted in Mutual Funds | PostTagIcon Tags: Business, Equity Fun
ds, fund manager, intelligent fund managers, invest, invest on large scale, Inve
stment, large-cap stocks, Market capitalization, mid-cap stocks, mutual fund, Mu
tual Funds, share holders equity, small-cap fund, Stock, Stock fund, stock marke
t, Wall Street