Equity Fund

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DEFINITION of 'Equity Fund'

A mutual fund that invests principally in stocks. It can be actively or passively (index fund) managed.

Also known as a "stock fund".

BREAKING DOWN 'Equity Fund'

Stock mutual funds are principally categorized according to company size, the investment style of the holdings in the portfolio and geography:

Size is determined by a company's market capitalization, while the investment style, reflected in the fund's stock holdings, is also used to categorize equity mutual funds.

Stock funds are also categorized by whether they are domestic (U.S.) or international. These can be broad market, regional or single-country funds.

There are so-called "specialty" stock funds that target business sectors such as healthcare, commodities and real estate.

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