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What is an equity fund?
Equity funds invest in the shares of different companies. They are most suitable as a long-term investment in place of or alongside direct investments in stocks. The funds diversify their assets across a range of investments to reduce investment risks. The minimum subscription is 10 euros.
Equity funds usually track a certain equity market or benchmark index. Therefore the value and performance of a fund is dependent on the performance of the market or index it tracks. For instance, the Nordea Global Passive Fund tracks the global equity markets, whereas the Nordea Finnish Passive Fund only tracks the Finnish equity market. The markets our funds track include the Nordic countries, the emerging markets, Asia, Japan and Latin America, to name a few.
An equity fund can also track a certain index, such as the S&P 500, which represents the 500 largest US companies by market capitalisation. We offer a wide array of funds tracking numerous indices and underlying markets, allowing you to choose the alternatives that best suit your risk appetite and targeted return.
Risk, return and diversification of equity funds
Equity funds have the highest risk and return potential among all funds. So if you invest in them, you should be prepared to withstand large fluctuations in value. The value of an equity fund is typically determined every day, and this daily value reflects the prices of the equities held by the fund, which in turn are influenced by the performance of the stock markets, the economic outlook and other economic news.
The risk in equity funds, however, is decreased through the diversification of investments over several assets, and many funds provide diversification over different sectors and market areas. The risk level is therefore lower than with investments in individual equities. Equity funds differ from one another in terms of risk level, so we recommend reading each fund’s investment policy, terms and conditions and prospectus carefully.
Wide range of equity funds
Nordea’s fund selection includes various equity funds investing in the equities of a certain country or continent as well as funds investing in a certain sector or companies of a certain size. A fund may invest its assets in large, stable companies or in small and medium-sized companies. You can also find funds investing in forest properties and the pharmaceutical and technology industries in our selection.
Equity funds also provide access to markets and sectors of various sizes. An equity fund may also select its investments based on the principles of sustainable investment. Each fund’s selection criteria for its investments, which is called its investment policy, is outlined in the key investor information document and the fund’s rules.
