What are Equity Funds?
Updated on Wednesday 12th July 2017
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Foreign investors interested in how to start a fund will need to register the business form following different regulations, depending on the type of vehicle chosen for incorporation. One of the way in which investors may start an investment activity is by opening an equity fund, a type of mutual fund which usually invests in stocks.
Definition of an equity fund
Regardless of the jurisdiction in which the equity fund is registered, the main characteristic of the vehicle, which can be set up as a hedge fund startup, refers to the ability of purchasing owhership in other businesses. As a general rule, in an equity fund, the portfolio manager will invest the founders’assets in the ownership of other companies (equities).
Foreign businessmen interested in how to start an investment fund registered as an equity vehicle may choose to incorporate it as a traditional mutual fund. In this case, the trading activities of the fund are required to take place after the end of the financial day, when sell and buy orders are calculated based on their net asset value.
At the same time, the equity fund can also be registered as an exchange traded fund. In this particular case, the investors will be able to trade during the financial day, as there are no restrictions in this sense.
Types of equity funds
The procedure on how to start a fund varies from one jurisdiction to another. As a general rule, most of the countries in which investors can set up investment funds usually provide the same types of vehicles, but there may also be numerous differences. However, equity funds can be set up as one of the following:
• international equity funds;
• global equity funds;
• sector equity funds;
• market capitalization equity funds;
• index fund.
The difference between an international equity fund and a global equity fund is given by the fact that in the case of the first type of vehicle, the businessmen can invest in stocks outside their country of origin, but in the latter situation, the investors may also choose to invest in their home country.
At the same time, an equity fund can be set up as open-ended or closed-ended vehicle.
Investors interested in receiving more details on the equity funds and their characteristics are invited to contact our team of affiliates, who can offer advice on the regulations applicable in a particular jurisdiction.