Equity funds are investment vehicles which pool capital from multiple investors to purchase shares of publicly traded companies. These funds aim to generate a total return through income and capital growth.
Investors choose equity funds based on their individual investment goals, risk profiles, and preferred market focus, such as large-cap, mid-cap, small-cap, or international equities. Equity fund managers actively or passively manage these funds, utilising various strategies to optimise their returns.
By diversifying across multiple stocks, equity funds help mitigate investors’ risk while offering the potential for to generate solid long-term gains, making them an appealing option for those looking to participate in the stock market with minimal effort.
Equity funds are pooled investment vehicles that primarily invest in publicly traded companies. These funds are commonly referred to as managed equity funds, mutual funds, stock funds, or share funds. By pooling money from multiple investors without the need for direct stock selection, equity funds provide diversification and professional management, making it easier for individual investors to access the stock market and potentially benefit from attractive total returns over the long term.
Equity funds are structured based on specific goals, such as income generation or capital growth, thus allowing investors to align their investments with their financial objectives. Equity funds offer a number of key advantages including professional management without the need for direct stock selection, and reduced risk due to diversification. This is general information only. Speak to a financial adviser and review a fund’s Product Disclosure Statement (PDS) before making an investment decision.
Equity funds pool money from multiple investors to buy shares in publicly listed companies. These investments combine to form a diversified portfolio which is either managed actively by a fund manager, or passively through an index-tracking strategy.
It’s important to understand that when you invest in an equity fund, you’re buying units in the fund — not the individual shares themselves. The value of your fund investment rises or falls based on the performance of the underlying shares.
There’s a vast array of equity funds available to investors. For example, some funds focus on capital growth and reinvest their gains to compound over time, while others prioritise income, paying dividends to investors at regular intervals. Other funds may invest in local or international markets, target specific sectors like technology or healthcare, or align with ethical screening criteria (ESG).
Equity funds offer professional management, built-in diversification, and varying levels of risk and return depending on the fund’s strategy. Importantly, all equity funds charge management fees, and returns aren’t guaranteed — so careful comparison is essential.
Equity funds deliver two primary investment outcomes: income or growth.
Understanding which of these outcomes best aligns with your investment goals is critical to selecting the right fund.
Income-focused equity funds generate income primarily through dividend distributions, which are generally made quarterly or semi-annually, thus providing regular cash flow for investors. Income-focused equity funds often invest in high-yielding stocks which consistently pay-out above-average dividends. In general, investors can choose between reinvesting their fund dividends to compound their returns or receiving cash dividend payments. Income-focused equity funds are ideal for investors seeking regular income payments such as self-managed superannuation funds (SMSFs) and self-funded retirees.
In tax-advantaged markets like Australia, franked dividends enhance fund income by allowing investors to benefit from tax credits.
Other benefits of income-focused equity funds include: lower volatility than most strategies, the potential for long-term capital growth, and diversification.
Growth-focused equity funds aim for capital appreciation through rising share prices, harnessing growth-oriented strategies centred on future earnings potential. These funds generally aim to amplify their long-term returns through portfolio rebalancing and dollar-cost averaging (buying more stock at regular intervals).
While growth-focused equity funds can be more volatile than income-focused funds, they have historically generated strong long-term returns, making them a compelling choice for investors who are willing to withstand market volatility.
Ultimately, these funds are best suited to long-term investors, wealth builders, and younger investors who have the time to ride out market cycles.
Investing in equity funds is a convenient and easy way for investors to gain exposure to the share market, whether you’re aiming to grow your wealth or generate income. But with so many options available, it’s important to choose an equity fund that aligns with your financial goals, time horizon, and risk tolerance.
Prior to investing in equity funds, it’s important to clarify what your investment goals are.
There are three main investment goals which equity funds can help deliver:
Once you’ve identified your investment goal, the next step is to compare the available equity funds based on the following factors:
Each of these criteria collectively informs better investment decisions.
You can invest in equity funds through several channels, including:
In summary, there’s no universal ‘best’ equity fund for all investors.
Equity funds can be a powerful tool — but only when matched to the right strategy.
Some investors prefer low-cost ETFs for broad market exposure, while others seek actively managed funds for the potential outperformance on offer. What matters most is clarity around your investment goals and a willingness to compare the options carefully.
Always read a fund’s Product Disclosure Statement (PDS) and consider seeking financial advice from a licensed professional.
💡 Tip: Use fund analysis tools like InvestmentMarkets to research equity funds based upon their performance, risk, and fees.
Further to understanding the various fund types in terms of how they’re managed and what they’re aiming to achieve, here’s a brief comparison.
| Fund Type | Strategy | Ideal For | Risk/Return Characteristics |
| Growth Funds | Invest in companies expected to grow faster than average | Investors seeking long-term capital appreciation | Higher risk and volatility, higher return potential |
| Value Funds | Target undervalued companies with solid fundamentals | Investors seeking undervalued opportunities | Medium risk and return potential |
| Index Funds (ETFs | Track a market index passively | Cost-conscious, passive investors | Market-matching returns, lower fees |
| Sector Funds | Focus on a specific industry or theme | Investors with thematic convictions | Higher risk and return potential |
| International Funds | Invest in global companies outside your home country | Investors seeking geographic diversification | Higher risk and volatility, higher return potential |
| Blue-Chip Funds | Invest in large, stable, dividend-paying companies | Conservative investors, SMSFs | Lower risk and volatility, lower return potential |
💡 Tip: Start by choosing a fund type that matches your goals (growth vs income) and risk appetite.
Equity funds are also categorised by the assets they invest in. This table breaks down the main asset class types based on region, strategy, size, or other factors.
| Asset Class | Description | Popular Features/Strategies | Best For |
| Australian Equities | Invests in companies listed on the ASX | Blue-chip stocks, mid/small caps, companies paying franked dividends | Local investors seeking stability or income |
| International Equities | Global exposure across developed and emerging markets | U.S., Europe, Japan, Asia, Global Tech leaders | Investors seeking diversification beyond Australia |
| Sector / Thematic | Targets specific industries or megatrends | Exposure to specific sectors such as technology, healthcare, clean energy, infrastructure | Thematic or future-focused investors |
| Market Cap-Based | Categorised by company size: large, mid, small or micro-cap | Large-cap = stable; Small & micro-cap = high growth | Investors with matching risk/return preferences |
| ESG / Ethical Equities | Apply screens based on environmental, social, or governance factors | ESG-driven exclusions (e.g. tobacco etc.) & inclusions (e.g. green energy) | Values-aligned investors |
💡 Tip: Many investors blend asset classes — like large-cap Australian income funds with global tech or ESG exposure — to create a diversified equity portfolio.
It’s also worth comparing equity funds with the other investment options, as per the table below.
| Comparison | Key Differences | Best For | Risk Profile |
| Equity Funds vs. Balanced Funds | Balanced funds include bonds/cash, Equity funds are stock-only | Balanced funds are popular with investors wanting more stability than equity funds | Equity funds generally have higher risk/volatility than balanced funds |
| Equity Funds vs. Bond/Debt Funds | Debt = bonds, Equity = shares | Debt funds are popular with income-focused or conservative investors | Debt funds are generally lower risk than equity funds |
| Equity Funds vs. Hedge Funds | Hedge = complex, less regulated, high cost | Hedge funds are popular with sophisticated investors who want to manage their market exposure | Most hedge funds carry lower market risk than equity funds but the use of leverage can more than offset this |
| Equity Funds vs. Private Equity Funds | Private = unlisted, long lock-ins, Equity = listed, liquid | Private equity is popular with high-net-worth/institutional investors | Private equity is illiquid, and thus is generally higher risk than equity funds |
💡 These are not always either/or decisions — many investors hold multiple fund types in their diversified portfolios.
Equity funds offer investors long-term upside potential — but they’re not without risk.
For example, here are a few of the main risks to be aware of
Markets rise and fall due to interest rates, inflation, global events, and economic shifts. Equity funds experience this market volatility.
Actively managed funds depend on manager skill. Poor manager decisions or style drift can affect returns.
Every equity fund charges fees. High MERs (Management Expense Ratios) can erode performance.
Some funds — especially those in micro-cap or emerging markets — may limit withdrawals in stressed conditions due to higher liquidity risk in these markets.
💡 Always review the PDS and understand the risk profile before investing.
Equity funds aren’t just for one type of investor — they’re a flexible, accessible way to invest in the share market, whether you're building wealth, seeking income, or diversifying your portfolio.
But that doesn’t mean every equity fund suits every investor.
Ask yourself:
If you answered “yes” to most of the above, equity funds could be a strong addition to your investment strategy — especially when chosen carefully and aligned to your goals.
Whether you’re a retiree prioritising franked dividend income, or a growth-minded investor seeking capital appreciation through global tech or small-cap exposure, there’s an equity fund for that.
Equity funds are powerful tools — but like all investments, they work best when matched to a well thought out investment plan.
💡 Final tip: Don’t rush. Compare your options. Use trusted sources. And if in doubt, speak to a licensed adviser.
An equity fund pools investors’ money to buy a diversified portfolio of shares. Managed by professionals or algorithms, these funds provide exposure to the stock market — aiming for capital growth, income, or both depending on the fund’s strategy.
Equity funds may suit you if you want long-term growth or income, can tolerate market ups and downs, and prefer professional management over picking individual stocks. They’re ideal for medium to long-term investors seeking diversification.
An ETF is a type of equity fund that trades on the stock exchange whereas an equity fund is an actively managed fund which may or not be listed. While both offer diversified exposure to shares, ETFs are passively managed, lower cost, and offer more trading flexibility than traditional managed equity funds.
A managed fund is a broad category of pooled investments. An equity fund is a type of managed fund that invests mainly in shares. So, all equity funds are managed funds, but not all managed funds are equity funds — some focus on bonds or cash.
Yes, some equity funds distribute dividends received from the companies they invest in. Australian equity funds often include fully or partially franked dividends, which can reduce your effective tax rate and boost after-tax income.
Compare equity funds based on your goals. Look at past performance, fees (MER), income yield, risk level, and investment focus. Use trusted tools like InvestmentMarkets, Morningstar, or Canstar, and always read the Product Disclosure Statement (PDS).
Yes. Most superannuation platforms and SMSFs allow investment in equity funds, including ETFs. It’s a common strategy for building long-term growth or income within a tax-effective retirement structure.
The Fund aims to deliver consistent, risk-adjusted, absolute returns, uncorrelated with the broader equity market (For Wholesale Investors Only) and other asset classes.
High conviction portfolio of well researched investments aim to deliver absolute returns balanced with capital preservation. The experienced team use traditional fundamental based quantitative and qualitative analysis.
The Fund is highly focussed on investing in long-term winners in attractive transforming markets when they are undervalued and offer outsized return potential.
A high conviction, benchmark agnostic Australian equities fund aiming to capture real earnings per share growth over the long-term.
The Fund is actively managed with a concentrated high-conviction, sustainability-themed strategy that invests in companies positioned to thrive during the transition to a more sustainable economy. (For Wholesale Investors Only)
Aims to provide long-term capital growth and regular income through investment predominantly in quality Australian industrial and resource shares. (Wholesale Investors Only)
The Fund aims to generate long-term after-tax returns for Aust resident investors in excess of the Benchmark after fees, including an annual gross dividend yield (incl franking) that exceeds gross dividend yield of the Benchmark (Wholesale Investors Only)
The Fund is designed for investors seeking strong medium to long-term capital growth, coupled with an increasing income stream payable from the dividends of the underlying shares.
The Fund aims to provide long-term capital growth through a portfolio of global equities. The team uses a fundamental, bottom-up approach, driven by valuation, building a concentrated, 'best ideas', high conviction global equity portfolio.
The aim of the fund is to achieve sustainable returns from capital growth, targetting 20% p.a.
The Fund provides an opportunity to access a highly experienced investment team with a proven track record of prudent, common sense investing.
Aims to provide long-term capital growth and income through investment predominantly in quality Australian industrial and resource shares. (For Wholesale Investors Only)
The principal objective of the Fund is to grow investor wealth over the long-term while maintaining a capital preservation focus by investing in a portfolio of Australian and International securities (For Wholesale Investors Only)
Blue Boat is a global, long-only equity fund that aims to generate substantial returns by investing in value opportunities in quality businesses
The Fund aims to enhance and preserve investor wealth over a 5- year period via a concentrated core portfolio of principally Australian listed securities.
