UK Accounting Glossary
A stock fund invests primarily in corporate equity securities and can be organized as a Unit Investment Trust (UIT), closed-end fund or mutual fund. A UIT stock fund distributes its assets to holders after a preset period of time, and may do little active trading once the portfolio is established. A closed-end stock fund and a mutual stock fund are ways of pooling investor money under active professional management.
Although any specific stock fund is likely to follow only one investing strategy, the range of strategies available is wide. A stock fund may attempt to replicate broad market indexes or focus on narrow industry sectors. When actively traded on an exchange, this form of stock fund is known as an Exchange Traded Fund (ETF). A stock fund may only invest in large-caps, mid-caps, or micro-caps. Other common stock fund strategies are value, growth, and income investing. A stock fund may even have an entirely discretionary strategy allowing it to follow the best judgment of its management.
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This glossary post was last updated: 5th February 2020.