What is Equity Mutual Funds?

About Equity Mutual Funds:

• It is a type of investment fund that pools money from investors to trade primarily a portfolio of stocks, also known as equity securities.
• They are also known as Growth Funds.
• Equity Funds are either Active or Passive. 
  • In an Active Fund, a fund manager scans the market, conducts research on companies, examines performance, and looks for the best stocks to invest.
  • In a Passive Fund, the fund manager builds a portfolio that mirrors a popular market index, say Sensex or Nifty Fifty.
• The fund manager has a passive role in stock selection.
• Buy, hold, or sell decisionsaredriven by the benchmark index, and the fund manager merely needs to replicate the same with minimal tracking error.
• Equity Funds can also be divided as per Market Capitalisation, i.e., how much the capital market values an entire company’s equity.
  • There can be Large Cap, Mid Cap, Small or Micro Cap Funds.
• There can be a further classification as Diversified or Sectoral / Thematic.
  • In the former, the scheme invests in stocks across the entire market spectrum, while in the latter, it is restricted to only a particular sector or theme, say, Infotech or Infrastructure.

Q1: What are Mutual funds?

Mutual funds are investment vehicles that pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities. They’re managed by professional fund managers or management teams who make investment decisions based on the fund’s objectives.

Source: Inflows to equity MFs hit record high in June

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