Does the investment risk vary more in one type of equity fund than another?
A. There are risks that all equity funds are generally prone to, such as a company’s fiscal health and the overall economic and market environment. There are risks that are more specific to the type of equity stocks a fund might invest in. For example, funds that generally invest mainly in small or midsize companies (small- or midcap funds) carry additional risks because their earnings tend to be less predictable, while some companies may experience significant losses resulting in more volatile stock prices. Sector funds also can be riskier due to their concentrations in one part of the market.
