Equity funds account for more than half of the assets held by mutual funds. There are a few different factors than can be taken into account when describing these funds:
- The fund’s purpose and risk level.
- The size of the companies whose stock is held by the fund.
- The geographical location of the companies in the fund.
In addition, there are two special types of equity funds that are not described by those factors:
- Index Funds.
- Sector Funds.
Mutual Funds by Purpose and Risk Level
- Aggressive Growth Funds
These funds generally invest in companies that are growing very fast – more than 20% annually. Stocks in these companies trade at relatively high prices. For these reasons, these funds carry a high risk.
- Growth Funds
Growth funds concentrated on companies that are growing at a slower – less than 20% – rate, but continuous rate. These companies are generally established, leading corporations whose consistent growth can be expected. These funds are less risky than the aggressive funds.
- Income Funds
Income funds focus on earning income through dividends, and therefore invest in companies that have a regular history of paying dividends.
- Growth & Income Funds
These funds invest in both stocks that pay dividends and in those representing growing companies.
Mutual Funds by Size of Held Companies
- Small Cap Funds
These funds invest most of their assets in companies with a small market cap, generally up to 5 billion dollars.
- Mid Cap Funds
These are funds whose assets are invested in companies a medium market cap – between 5 and 20 billion dollars.
- Large Cap Funds
Large cap funds invest in companies with market caps beyond 20 billion dollars.
Mutual Funds by Geographical Location of Held Companies
- Funds that invest only in American corporations are Domestic Funds.
- International Funds focus on companies outside America.
- Global Funds are ones that invest in both American and foreign corporations.
