Equity means stock. Equity mutual funds, therefore, invest in stocks, and these are called equity funds. Almost all equity mutual funds own a broad base of hundreds of individual stock, giving equity mutual funds the benefits of diversification that are so appealing to mutual fund holders.
When a company succeeds, the stock price goes up and it may issue dividends to stockholders. If the company hits hard times, the stock price falls and dividend payments may be suspended. When you sell a stock, you earn money if it has gained value since you bought it. Likewise, you lose money if it has declined. Equity mutual funds help distribute out the risk.
There are many different types of equity funds. Some equity mutual funds specialize in investing in large-cap stocks, others in small-cap stocks, and still others invest in what's left -- mid-cap stocks.
Equity mutual funds will not limit stock purchases to the United States. They may purchase stocks from a single other country, like canadian, or a variety of countries.
Generally, the investment objective of this class of equity mutual funds is long-term capital growth with some income. They are intended to be long-term investments and are best suited for those looking to create a retirement plan.
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