Equity funds
A fund that is exclusively or primarily invested in stocks and shares is called an equity fund. An equity is a share of the ownership of a company. Equity funds diversify risk by investing in a minimum of 16 different equities (and in reality considerably more).
Fixed income funds
A fixed income fund is a mutual fund invested exclusively in interest-bearing securities. An interest-bearing security pays you a fixed level of interest on your investment.
Balanced funds
Balanced funds include equities and fixed income securities in varying combinations.
Generation funds
Generation funds are balanced funds specially adapted for certain age groups. Investment risk decreases for every five to ten years by gradually shifting invested capital into fixed income securities as the investor approaches retirement age.
Life cycle management
AP7 Såfa is a fund portfolio with a "life cycle" profile, meaning that the investment risk is higher for younger individuals in order to generate higher returns. When the investor is 55, the investment risk reduces annually until he or she is 75. The average risk over the course of the investor's life is roughly the same as for the old Premium Savings Fund but projected investment returns are higher.
