Equity funds are investment funds that primarily invest in stocks or shares of companies. They aim to provide investors with capital growth over time by taking advantage of the potential appreciation in the value of these stocks. Equity funds can vary in their investment strategies, focusing on different sectors, regions, or company sizes. Investors in equity funds typically buy shares in the fund, which are then pooled together to purchase a diversified portfolio of stocks. This diversification helps to spread risk, as the performance of the fund is not solely dependent on a single company or sector.