Stock fund

Short description: Investment fund for the asset of stocks

A stock fund, or equity fund, is a fund that invests in stocks, also called equity securities.[1] Stock funds can be contrasted with bond funds and money funds. Fund assets are typically mainly in stock, with some amount of cash, which is generally quite small, as opposed to bonds, notes, or other securities. This may be a mutual fund or exchange-traded fund. 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, whereas index funds try as well as possible to mirror specific stock market indices.

## Contents

* 1 Fund types
* 1.1 Index fund
* 1.2 Growth fund
* 1.3 Value fund
* 1.4 Sector fund
* 1.5 Income fund
* 1.6 Balanced fund
* 1.7 Asset allocation fund
* 1.8 Fund of funds
* 1.9 Hedge funds
* 2 See also
* 3 References

## Fund types

### Index fund

Main page: Finance:Index fund

Index funds invest in securities to mirror a market index, such as the S&P 500. 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.[2]

### 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.[3]

### Sector fund

A fund that invests in one area of industry is called a sector fund.[4] 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

Main page: Finance: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

Main page: Finance:Fund of funds

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

### 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.

## See also

* Bond fund
* Money fund
* Income fund
* Target date fund
* Collective investment scheme
* Investment management
* Venture capital

## References

1. ↑ U.S. Securities and Exchange Commission on Stock Funds
2. ↑ "Mutual Funds: Is index fund a good option for investors?". 13 May 2020. https://www.financialexpress.com/money/mutual-funds/mutual-funds-is-index-fund-a-good-option-for-investors/1957302/. Retrieved 19 May 2020.
3. ↑ "Value funds: Patience of investment" (in en). https://www.theweek.in/news/biz-tech/2020/05/26/value-funds-patience-of-investment.html.
4. ↑ "Sector Fund Definition". Investopedia. http://www.investopedia.com/terms/s/sectorfund.asp.

* v
* t
* e

Financial markets

Types of markets|

* Primary market
* Secondary market
* Third market
* Fourth market

Types of stocks|

* Common stock
* Golden share
* Preferred stock
* Restricted stock
* Tracking stock

Share capital|

* Authorised capital
* Issued shares
* Shares outstanding
* Treasury stock

Participants|

* Broker-dealer
* Day trader
* Floor broker
* Floor trader
* Investor
* Market maker
* Proprietary trader
* Quantitative analyst
* Financial law
* Regulator
* Stock trader

Exchanges|

* Electronic communication network
* List of stock exchanges
* Trading hours
* Multilateral trading facility
* Over-the-counter

Stock valuation|

* Alpha
* Arbitrage pricing theory
* Beta
* Bid–ask spread
* Book value
* Capital asset pricing model
* Capital market line
* Dividend discount model
* Dividend yield
* Earnings per share
* Earnings yield
* Net asset value
* Security characteristic line
* Security market line
* T-model

Trading theories
and strategies|

* Algorithmic trading
* Buy and hold
* Contrarian investing
* Day trading
* Dollar cost averaging
* Efficient-market hypothesis
* Fundamental analysis
* Growth stock
* Market timing
* Modern portfolio theory
* Momentum investing
* Mosaic theory
* Pairs trade
* Post-modern portfolio theory
* Random walk hypothesis
* Sector rotation
* Style investing
* Swing trading
* Technical analysis
* Trend following
* Value averaging
* Value investing

Related terms|

* Block trade
* Cross listing
* Dark pool
* Dividend
* Dual-listed company
* DuPont analysis
* Efficient frontier
* Flight-to-quality
* Government bond
* Haircut
* Initial public offering
* Long
* Margin
* Market anomaly
* Market capitalization
* Market depth
* Market manipulation
* Market trend
* Mean reversion
* Momentum
* Open outcry
* Position
* Public float
* Public offering
* Rally
* Returns-based style analysis
* Reverse stock split
* Share repurchase
* Short selling
* Slippage
* Speculation
* Stock dilution
* Stock exchange
* Stock market index
* Stock split
* Trade
* Uptick rule
* Volatility
* Voting interest
* Yield

* v
* t
* e

Investment funds

By asset class|

| Traditional|

* Stock fund
* Bond fund
* Money market fund

|

Alternative|

* Real estate investment trust
* Private equity fund (Venture capital fund, Mezzanine investment funds, Vulture fund)
* Hedge fund

By style|

* Index fund
* Target date fund
* Growth fund
* Value fund
* Income fund
* Sector fund
* Balanced fund
* Asset allocation fund
* Fund of funds

By investment strategy|

| Traditional|

* Long-only fund
* Stable value fund

|

Alternative|

* Long/short equity fund
* Market neutral fund
* 130–30 fund
* Event-driven fund
* Global macro fund
* Managed futures fund
* Multi-strategy fund

By structures|

| Public|

* Mutual fund (Open-end fund)
* Exchange-traded fund
* Closed-end fund
* Real estate investment trust

|

Institutional|

* Hedge fund
* Private equity fund
* Pooled income fund
* Endowment fund
* Pension fund
* Sovereign wealth fund
* Sovereign investment fund
* Urban wealth fund

By measure of returns|

* Absolute return
* Total return

Related topics|

* Alternative investments
* Traditional investments
* Net asset value
* Assets under management
* Rate of return
* Time-weighted return
* Money-weighted rate of return

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