How to Manage an Equity Mutual Fund

Equity mutual funds are designed to provide fast growth through investments in stocks. Although stocks are considered to be somewhat riskier than bonds, they also have the potential to reap high rewards. If you're looking for a more aggressive approach when you manage your mutual fund, you might find equity funds of great interest. Additional information can help you choose the right equity fund for your financial needs.

Choose an Equity Mutual Fund

Develop a realistic financial strategy. Depending on how financially savvy you are, you can create one on your own or turn to a professional for advice.

Select mutual fund types that will fit in with your overall goals. All of the fund types should be given consideration so you know you're not missing out on a potential moneymaker.

Diversify your portfolio further if you already own shares in mutual funds.

Study the performance of the fund over a long period of time. Did it perform consistently? Given the fund's historical performance, what can you hope to take home after your expenses and fees?

Look at the level of risk involved with the fund.

Get to know the person who will manage your equity fund. Do your investment styles match? Do you feel confident in his or her abilities to manage your money?

Consider the services you'll receive as a shareholder. This information can be found in the prospectus or by calling a fund customer service representative.

Take a look at the other funds available within the same fund family. You may find you are interested in several mutual funds from the same family.

Examine every aspect of the prospectus closely. There is a lot of valuable information in the prospectus about fees, management expenses, financial goals and distribution arrangements.

Buy shares in the fund that you've chosen.

Keep a close eye on developments in your fund so you'll know how they affect you.

Tips & Warnings

• An equity mutual fund is also known as a stock mutual fund.
• Don't go overboard with investing in mutual funds. Remember that less is better, as your money isn't just going toward one mutual fund--it's also tied up in dozens of stocks.
• Keep in mind that equity mutual funds do contain some level of risk. When in doubt about your investments, contact your financial adviser immediately.