Equities investments are investments in things such as company shares. The term equity is generally seen as ownership of shares or stocks of a particular company and they are one of the principal asset classes in the investment world. However, equity can also apply to fixed-income bonds and cash or cash equivalents. However, in this article we are addressing the benefits of equities in asset management in a share/stock context.
Shares are probably the most popularly traded financial instruments in the investment world, alongside currencies (foreign exchange trading). With the development of the internet over the past two decades, share trading is now open to even the most inexperienced trading with the ability to trade with as little as £100 and with trading charges for as little as £10 per trade.
Picking which companies to own, which industries to have exposure to, or in other words how to structure and manage a portfolio of equities, is not an easy task and the private investor is well advised to seek professional advice. This can be achieved through the services of a stockbroker or investment or asset manager, who can manage a portfolio of directly held equities on an individual basis. It can also be achieved with increasing popularity, through the use of collective investment vehicles such as unit trusts and OEICs. In this case the fund manager will effectively run his or her own portfolio of directly held equities, often following a particular theme such as income or growth, and the private investor will then have shares, or units, in this portfolio.
When a company warns that it’s profits may fall, or even not grow as fast as previously, contrary to the expectations of the market, it is common for its share price (and therefore the value of any holding) to fall by 10%, 20% or potentially even more. And when a quoted company fails completely, it’s shareholders are left with valueless bits of paper; they can lose the value of their investment in the company in it’s entirety. Even if the company manages to continue trading in some form, shares in the company can become all but worthless.
Not all company shares are listed on the stock exchange, in fact in order to protect investors, listing requirements effectively bar recently established, smaller companies from having their shares traded on an exchange. However, it is frequently exactly these kinds of recently established companies that would benefit most from the access to capital that the stock exchanges can provide. Venture Capital Trusts are investments companies, quoted on the stock exchange, which are set up with the specific aim of matching capital from private investors with recently established, growth-oriented smaller UK companies. The managers of a new venture capital trust have three years in which to choose companies to invest in and during this time monies raised from private investors will typically be invested in cash or bonds.
Shares are probably the most popularly traded financial instruments in the investment world, alongside currencies (foreign exchange trading). With the development of the internet over the past two decades, share trading is now open to even the most inexperienced trading with the ability to trade with as little as £100 and with trading charges for as little as £10 per trade.
Picking which companies to own, which industries to have exposure to, or in other words how to structure and manage a portfolio of equities, is not an easy task and the private investor is well advised to seek professional advice. This can be achieved through the services of a stockbroker or investment or asset manager, who can manage a portfolio of directly held equities on an individual basis. It can also be achieved with increasing popularity, through the use of collective investment vehicles such as unit trusts and OEICs. In this case the fund manager will effectively run his or her own portfolio of directly held equities, often following a particular theme such as income or growth, and the private investor will then have shares, or units, in this portfolio.
When a company warns that it’s profits may fall, or even not grow as fast as previously, contrary to the expectations of the market, it is common for its share price (and therefore the value of any holding) to fall by 10%, 20% or potentially even more. And when a quoted company fails completely, it’s shareholders are left with valueless bits of paper; they can lose the value of their investment in the company in it’s entirety. Even if the company manages to continue trading in some form, shares in the company can become all but worthless.
Not all company shares are listed on the stock exchange, in fact in order to protect investors, listing requirements effectively bar recently established, smaller companies from having their shares traded on an exchange. However, it is frequently exactly these kinds of recently established companies that would benefit most from the access to capital that the stock exchanges can provide. Venture Capital Trusts are investments companies, quoted on the stock exchange, which are set up with the specific aim of matching capital from private investors with recently established, growth-oriented smaller UK companies. The managers of a new venture capital trust have three years in which to choose companies to invest in and during this time monies raised from private investors will typically be invested in cash or bonds.
