Equity

What is equity?

Equity means ownership. When you buy equity in a company, you’re buying shares (small pieces of ownership) in that company. The terms “equity” and “shares” are often used interchangeably.

What is an equity fund?

An equity fund is a fund (a bundle that holds many investments) that invests in shares. An ETF or index fund that tracks the FTSE 100 is an equity fund because it holds shares in 100 companies.

Equity vs other investments

Equities are one type of asset. Others include bonds (loans to companies or governments) and cash. Equities tend to offer higher long-term returns but with more ups and downs along the way.

Key points about equity

• Equity means shares. Ownership in a company
• An equity fund holds shares, as opposed to bonds or cash
• Higher risk, higher potential return compared to bonds or savings