Equity Funds
Equity funds invest mainly in company shares, giving investors ownership in businesses across different sectors, regions, or market sizes. These funds may be actively managed—where portfolio managers select specific investments—or passively managed to mirror a stock market index. Their primary objective is long-term capital growth, as equities have historically offered higher returns than bonds. However, this potential for higher returns also comes with greater risk.

Balanced Funds
Balanced funds hold a mix of equities, bonds, and sometimes cash. The allocation does not necessarily mean an even 50/50 split; the proportion of stocks and bonds varies based on the fund’s strategy or market conditions. By combining both asset classes, balanced funds aim to deliver a blend of growth, income, and capital stability. Because stocks and bonds often perform differently in various market cycles, this mix can help smooth out returns over time.

Fixed-Income Funds
Fixed-income funds focus primarily on bonds and other debt instruments, often with larger allocations to cash or cash equivalents than equity funds. They may be actively managed or structured to follow a bond index. These funds typically aim to preserve capital and provide regular income, offering lower potential returns than equity funds but with less exposure to volatility.

Sector Funds
Sector funds concentrate their investments within a single industry or market segment, such as energy, healthcare, or technology. While they can offer higher growth potential if the chosen sector performs well, they also carry more risk, since the performance of all companies in the same sector is often influenced by similar economic or market events.