Equity fund management occurs when trained investment professionals oversee pooled investment vehicles known as mutual funds that focus their investments on stocks. Mutual funds take their capital from multiple investors who then share in the gains of the securities within the funds. The general goal of equity fund management is to provide investors with a solid portfolio of stocks that minimizes risk and provides growth potential. Management may focus its investments on one portion of the the market, or it may spread it around liberally.
Some investors who get involved in the stock market may not have the funds to make more than a few investments. Those in that situation are basing much of their investment success on the success of those few securities, and just one that performs poorly can deliver a crushing blow. One way to avoid this predicament is through an equity fund, which takes investment capital from multiple sources and makes a wide variety of investments throughout the market. Investors can rely on equity fund management, a team of investment experts, to make their stock choices for them.
When an investor is seeking out the right type of equity fund management, he should be looking for a fund that shares similar goals and strategies in terms of risk and reward. These aspects of an equity fund are spelled out in the fund prospectus. This document shows, among other things, the securities within the fund, statistics concerning past performance of the fund, and future goals for the capital of the investors in the fund.
Many mutual funds have capital spread all over the market, but there are funds that concentrate the capital within them on certain aspects of the market. For example, some funds may look only for securities that have a certain market capitalization, like small-cap or large-cap stocks. Other funds may have capital placed only in stocks that are within a certain industry, like the technology market. In the prospectus, equity fund management will delineate exactly where in the market investments will be placed.
No matter what types of investments are made, equity fund management is usually focused on providing investors with diversity. By keeping capital in a variety of sources, it is less likely that one or even a few underperforming stocks can do much harm to the fund as a whole. In addition, fund managers are trained to look at various statistical metrics to find stocks that have growth potential in both the short-term and the long-term future.