Equities
What are Equities?
Equities represent ownership stakes in the company who issues them. When you buy a share you become part owner of the company and may have the right to vote on key decisions and also receive a share in the profits through the payment of dividends.
Types of Equities?
There are various types of equities, the two of the main types are:-
- Ordinary - Carry no voting rights, highest potential for returns and are deemed to be the riskiest form of equity.
- Preference - Usually carry voting rights, pay dividends but do not benefit from any increase in the company value.
The role of Equities in a portfolio
Over the long term, shares have historically provided better returns than other asset classes such as cash, bonds and property. There are two main ways to benefit from owning shares. These are capital appreciation i.e. the company shares increasing in value and secondly, payment of dividends during ownership. However, this higher return doesn’t come without risk. Equities have historically had the highest volatility and therefore deemed to carry more risk.
Benefits
- Potential for higher returns over the long term
- Provide income through dividends payments
- Provide potential for capital growth
Drawbacks
- Volatile history therefore more risk involved
- No capital guarantee
- Value can fluctuate
To find out what type of investment is best for you, it’s important that you understand your attitude to risk.
Visit the Guide to Investing and Risk pages to find out more or take our simple questionnaire and see examples of the types of funds that may meet your needs.
Assess your attitude to risk - take our questionnaire
To find out more about any of
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simply:
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- Call a member of our Client
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