What is a Core Equity Fund?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 10 March 2020
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A core equity fund is a type of balanced fund which seeks to achieve a level of asset allocation that ensures steady growth over an extended period of time. A fund of this type is often in the form of mutual funds or other types of equity funds that help to serve as the basis or core for the investor’s portfolio. Typically, a core equity fund will provide opportunities to invest in both domestic and international holdings that are specifically targeted by the fund’s managers and chosen based on the level of risk that the investor is willing to assume.

There are several benefits to going with a core equity fund arrangement, as opposed to other investment strategies. One has to do with the costs involves of assembling and maintaining the assets that are included in the fund. Many fund managers offer reduced rates and fees related to transactions, maintenance and the preparation of financial reports to investors. In addition, the managers of the fund thoroughly research assets for inclusion in the fund, allowing investors to benefit from that research without having to personally investigate each and every asset within the core equity fund.


As part of the operational strategy, managers of a core equity fund will pay close attention to the market capitalization of each asset involved. This means understanding the relationship between price and the number of shares outstanding at any given time. Also factored into the process is attention to the market cap associated with the company issuing the shares, and the book-to-market ratio currently enjoyed by that company. This makes it easier to match the risk level associated with the offerings with the preferences of the investor, ensuring that the opportunity exists for the best possible returns given those preferences.

When evaluating a core equity fund, an investor should take into consideration the past performance of the fund, making note of the average total return of the fund over its life. Considering the degree of diversification found in the assets held by the fund is also important, since the idea is to maintain a combination that is capable of performing well even in adverse economic climates. Investors should also evaluate the reputation of the core equity fund within the investment community, getting some idea of what others think about the prowess of the managers in terms of protecting the interests of their customers and making sure they are ready to respond to upcoming shifts in the marketplace that could have an impact on the fund’s holdings.



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