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Wondering what to do with that extra cash on your hands? Without a doubt, shopping till you drop is enticing enough, but perhaps you should be more prudent with your money. You could put it aside in a savings account where it stays until you need to pay for that brand-new car, repair that leaky roof, send your teen abroad for that student exchange programme or have it handy in case of an emergency.
But why not turn this cash into an investing venture and put that money to work for you? Your first instinct may be to plunk it into the hottest company stock of the moment, but there are other ways to go about it. Diversifying into alternative asset classes is becoming increasingly important and with investors seeking returns, investing in a basket of stocks instead – called an equity fund – has become more and more popular. Carrying less risk than directly investing in the stock markets and boasting a host of benefits, equity funds are ideal for those who would like to venture and participate in the growth of the equity markets.
Here we cover everything there is to know about equity funds and reveal why they are a smarter means to make your money grow and become the springboard to your financial journey.
An equity fund is a type of mutual fund also known as stock fund and its purpose is to buy ownership in businesses via a basket of stocks. In other words, investors buy shares of the fund which then purchases stocks in a range of companies. The objective of equity funds is to identify opportunities to invest in businesses that are expected to grow, returning a profit to the holders of the fund, as well as providing long-term growth through capital gains.
Primarily funds can be categorised according to the size of companies they invest in, the company’s geographic location, as well as the investment style of the holdings in the portfolio. These funds can also be grouped according to whether they are domestic or international. In addition, certain equity funds target specific business sectors like technology, real estate or healthcare.
Various options for investors exist such as the Global Opportunities Fund which can be of particular interest to those wishing to participate in a wide range of high-profile global equities or more specific to a region such as the Euro Equity Fund.
The price of an equity fund is measured based on its net asset value (NAV) – the net value of an entity calculated as the total value of its assets minus the total value of its liabilities. Generally speaking, the more diversified the fund, the less of a negative effect an individual stock’s adverse price movement has on the overall portfolio and on the share price of the equity fund.
As equity funds are increasingly becoming more popular amongst investors, many are those who regard them as an ideal means to invest in the stock market and make a profit. From the relatively small amount of capital needed to purchase them to the possibility for diversification that can substantially reduce risk, equity funds are particularly suitable for small and less financially versed investors. Some further advantages include:
Whether you are looking to invest in a particular market sector such as the financial, pharmaceutical or technology-related industries, a specific stock exchange like the likes of the London Stock Exchange or you would rather tap into the domestic market, the vast variety of equity funds available render them appropriate for any type of risk profile, while they can meet any investment objective you may have.
Have a look at some of the equity funds categories that you may come across:
Yet, apart from the various types outlined above, equity funds can also be bought as traditional mutual funds which are made up of a pool of money from different investors who invest in securities like stocks, bond and other assets -, as well as exchange-traded funds, otherwise known as ETFs, which collect securities such as stocks that often track an underlying index.
It is a well-known fact that tech companies have, in a fairly short period of time, amassed substantial power to influence the markets, so much so that the world’s top five companies are technology corporations – think tech giants like Apple, Google and Microsoft. If you are looking to invest globally in equities and benefit from the rising demand that technology companies have in all sectors of the economy, the UBS equity fund opens the door to numerous opportunities.
Primarily focused on the equity shares of select companies that are unrivalled in their products and services, be it those that operate in the traditional areas of information technology or those which specialise in sectors like telecommunications and the media, the fund provides interesting earning possibilities, yet keeping the level of risk under control. In addition, it offers diversification in multiple sectors, as well as the right mix of exposure in both developed and emerging markets. In addition, CC are the representatives of UBS in Malta having access to the market leading Euro Equity Tech Opportunity Fund with a market beating performance of 311.64% over a 5-year period. For further information on this fund speak to one of our financial advisors.
On the other hand, if you would rather diversify into a variety of asset classes as opposed to a specific sector, then the Global Opportunities fund is the ideal means to do just that. By investing primarily in Europe’s top companies trading in major European markets, the fund is perfect for those seeking to achieve capital growth over time and to have a diversified equity portfolio of blue-chip companies. The fund operates under the UCITS (Undertakings for the Collective Investment in Transferable Securities) which is regarded as the gold standard for EU investment funds particularly for retail investors. In addition, it is managed by a team of investment professionals who monitor developments on a daily basis.
Historically equity funds have surpassed and outperformed safer investments such as bank accounts and bonds. As a result, they can truly serve as a real driver for your portfolio’s growth. If after recognising the merits of these funds you are ready to start investing but you may still be wondering what precise characteristics you should look for in an equity fund, seek the following:
Also, prior to taking any decisions go through the prospectuses of each equity fund so as to determine which one matches your risk-taking or risk-avoidance and make sure to read the fine print to familiarise yourself with the fees you are required to pay for investing in the fund.
And remember that even equity funds tend to experience market fluctuations that can result in below the overall market returns, while they do carry some form of risk. Ensure that your investments align with your overall long-term financial goals and if you are experiencing choice overload, always seek the advice of professionals before embarking on any schemes.
Run by a dedicated team of investment professionals with an exceptional track record in asset management, Calamatta Cuschieri funds operate under the UCITS structure and aim for strong market performance. Have a look at these 5 reasons why you should opt for CC funds and find out more about how they can maximise your returns.
What’s more, at CC we understand that customers tend to lead very hectic lifestyles and for this reason we offer Financial Planning Meetings at no extra cost, held with one of our experienced advisors. This would ensure that prior to taking out any investment, you will have the opportunity to go through your priorities, assess what is suitable for you and what sort of return and risk profile you have so that we can advise you on the best option available based on your needs.
Get in touch with one of our financial advisors today.
Disclaimer
The information provided on this website is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Similarly, any views or opinions expressed on this website are not intended and should not be construed as being investment, tax or legal advice or recommendations. Investment advice should always be based on the particular circumstances of the person to whom it is directed, which circumstances have not been taken into consideration by the persons expressing the views or opinions appearing on this website. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views, or opinions appearing on this website. You should always take professional investment advice in connection with, or independently research and verify, any information that you find or views or opinions which you read on our website and wish to rely upon, whether for the purpose of making an investment decision or otherwise. CC does not accept liability for losses suffered by persons as a result of information, views, or opinions appearing on this website.
Calamatta Cuschieri Investment Services Ltd is licensed to conduct investment services business under the Investments Services Act by the MFSA and is also registered as a Tied Insurance Intermediary under the Insurance Distribution Act.
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