Historically, equities have outperformed safer investments, such as bank accounts and bonds, and can act as the real driver for growth in your investment portfolio. However, investment in equities exposes you to the potential to lose some, or all, of your money. Shares are seen as the riskiest asset class, so you should take extreme care when you consider investing in equities and the different types that are available. We understand direct investment in equities can be risky, as you’re reliant on the performance of a relatively small number of companies.
This is why we ensure we do are research and our due diligence and why buying equities through an investment fund with our company is a lot safer as we invest in a range of shares in different companies. Equity funds tend to focus their investment on various countries, regions, industries and investment styles as a way of diversifying, or spreading risk. There are a number of different types of equity funds, each with their own characteristics and level of risk.
The return from equities comes in two forms: dividends and capital growth. Dividend payments are the distribution of the profits that the company has made, usually paid out twice a year. You’re more likely to receive dividends from larger, long-established companies, the more profitable it is, the larger the dividend payout could be. Smaller companies are less likely to pay out a dividend as they reinvest their profits to grow their business. However, if a smaller company succeeds, the value of your shares could increase. You can make a profit if you sell your shares for a higher price than you paid for them. This provides you with capital (the money you invested to begin with) growth.
A structured investment program will vary depending on the risk tolerance of the individual investor. Structured products involve various exposures to fixed income markets and various derivatives. This is why structured investment programs are specifically created to meet the investor’s needs. Conservative investors will have a higher exposure to the fixed income markets, whilst risk-tolerant investors will have a higher exposure to derivatives and equities. Structured produces are often used as an alternative to a direct investment or to allocate assets in a portfolio against risk exposure