Equity Funds

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Equity funding is a dual purpose finance term. In personal finance, equity funding represents an insurance policy paid for by a mutual fund. The value of the mutual fund shares pays the premiums of the insurance policy, allowing individual investors to have the advantage of insurance policies, along with the growth potential of a traditional mutual fund investment. In business, equity funding represents the amount of external financing companies use outside of traditional bank loans and other debt instruments.

Equity funding relating to the personal investment of insurance policies paid for by mutual funds was a common investment sold by the now-bankrupt Equity Funding Corporation of America. These investment vehicles were seen as highly controversial when first issued in the personal finance market. During the 1960s and 1970s, Equity Funding Corporation of America was found to have conducted massive accounting fraud relating to securities investments, including personal equity funding investments. Following this negative attention, these personal investments became very unpopular with investors and their use in securities markets declined significantly.