Equity funds invest in stocks of companies with the primary objective of long-term capital appreciation. There are different types of equity funds based on their investment style and the types of stocks they invest in. Value funds focus on stocks that are currently undervalued but have strong fundamentals. Growth funds invest in fast growing companies in rapidly expanding industries. Blend funds combine both value and growth styles, investing in a mix of undervalued and fast growing stocks.

1. Types of Mutual Funds - Equity Funds
This is an era of knowledge driven investment. There is a wide range of equity funds (EF) /stock funds (SF)
that are available for investment. There are 10000+ MFs in North America; unless one knows the type and
objective of funds, he/she will not be able to opt for the one apt for her. One must assess his/her purpose
of investment, and find which type of MF will appropriately serve the purpose. Visit us now
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What are Equity Funds?
Equity funds invest in stocks of companies. However, all funds neither invest in similar stocks nor invest
in the different stocks in the same proportion. The character of an EF depends on the nature of the stocks
it invests in, and its objectives. The equity funds, predominantly invest in stocks of large and small cap
companies. Some equity funds invest in both large and small cap companies in a predetermined
proportion.
Objective
As the nature of the assets invested in are stocks, it is evident that long term capital appreciation is the
primary objective of these funds.
Risk Profile
Equity funds are characterized by "high risk- high return".
Examples
Fidelity Select Multimedia Portfolio, Rydex Series Trust Consumer Products Fund, Brown Vanguard Equity
Income Fund, Direxion Daily Gold Miners Bear 3x Shares, Global Diversified Investment Grade Income
Trust II, etc.
The selection of stocks for building the fund's portfolio is called investment style. Depending on the
investment style, generally, we find three types of mutual funds.
Now, let us look at the different types of Stock funds available-
Value Investment: These EFs invest in stocks that have strong fundamentals but are currently out of
steam.
Stock selection criteria:
Low P/E ratio
Low Price to book value
High dividend yield ratio.
Examples: Brown Vanguard Equity Income Fund, American Beacon Bridgeway Large Cap Value Fund,
Delaware Pooled Trust Large Cap Value Equity Portfolio
Growth Investment: These funds invest in fast growing companies belonging to rapidly expanding
industries.

2. Stock selection criteria:
High P/E ratio
High sales growth ratio
High price to book value ratio
Huge cash flow
Low dividend yield ratio
Examples: Brown Advisory Flexible Value Fund, Vanguard PrimeCap Core Fund,
Blend Investment: Blend investment style refers to a combination of value and growth investment style,
where neither of the styles predominates the investment strategy. These funds invest in both value and
growth funds in a particular proportion that depends on the fund manager and market conditions.
Stock selection criteria:
Stock selection criteria followed for both value and growth style.