Everything you need to know about Equity Funds and why they can be an ideal means of Investment


Everything you need to know about Equity Funds and why they can be an ideal means of Investment


  • Stock markets have continued to perform consistently over the years providing good returns to investors.
  • Money sitting idle for long periods deteriorates over time with the impacts of inflation.
  • If you happen to have a windfall of money to spare, thinking of growing your capital instead of spending is the way to go.
  • Investing in a basket of stocks through an equity fund that is managed by professionals can help you embark on your financial journey in a proactively managed way.
  • Funds come in a wide variety of categories such as geographic location, industry or company size to name a few. The sheer choice of equity funds available means that there is something for everyone.
  • Investing in funds rather than in direct stocks is recommended for investors who may not have the time and experience to track day-to-day movements. It is also considered to be less risky since funds offer more diversification and are actively managed by experts.
  • Looking to invest in equity funds? Run by a dedicated team of investment professionals with an exceptional track record in asset management, we can advise you on the best option available based on your needs. Get in touch with us today.

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.


What are equity funds?


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.


What determines the size and price of an 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.


What are the benefits of investing in equity funds?


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:

  • Simplicity at its best: unlike other forms of investments, equity funds require no experience or prior knowledge in economics or the financial markets to be a successful investor since they are managed by the investment manager.
  • Increase your profit: investing in equity funds can offer you returns in two forms – dividends and capital growth.
  • Benefit from diversification: most investors lack the time, money and skill set to build a broad portfolio, one stock or bond at a time. An equity fund offers diversification but at a fraction of the cost compared to other forms of investment. What’s more, diversification helps reduce risk making it less likely for investors to lose any money on their investments over time since any sudden market shocks that may affect individual stocks or sectors can be easily mitigated.
  • Make the most of liquidity: equity funds are highly liquid, which means that you can redeem your investments whenever the need arises. You can also retrieve your investments at a higher NAV than that at the time of purchase or you can invest in more equities at a lower NAV during market falls. Irrespective of what your needs are, the liberty of investing and redeeming as you please affords you better control over your investments.


  • Enjoy peace of mind: whereas direct investment in shares can be risky if you rely on the performance of a small number of companies or maybe do not have the time to monitor them, buying equities through a fund offers the opportunity to invest in a range of shares in different companies and therefore carries less risk.

  • A wide choice of funds: with so many equity funds available out there, investors have the flexibility to choose the type of equity fund based on how much risk they are willing to take.
  • Professional management: funds are managed daily by their respective investment managers who have a wide experience and the necessary knowledge is a crucial step when deciding to invest since any decisions taken will be carried out following careful research and an overall strategy, while various forms of risk may be mitigated. In addition, professionals can monitor things like economic, sector, asset class and stock developments, gauging any potential opportunities for your portfolio. Investors can easily download the Key Investor Information Document (KIID) and view the quick facts about a fund, as well as its track record.
  • Boost your investing habits: with the ability to invest small sums of money at regular intervals through investment plans, investing in equity funds on a regular basis becomes effortless, while it can help you develop the habit of investing, increasing your long-term wealth.


A variety of equity funds for everyone

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:

  • Geographically focused equity funds – these may include worldwide funds that invest in international assets from anywhere around the world and domestic equity funds which invest in assets found exclusively in the investor’s home country.
  • Market Capitalisation focused equity funds – these can be broken down into mega-cap, large-cap, mid-cap, small-cap and micro-cap equity funds. As expected, each type reflects the market capitalisation of the company they are investing in. For instance, mega-cap equity funds invest in stocks of the largest companies around the world that are worth hundreds of billions of euros. On the other hand, a mid-cap equity fund focuses on those companies with a medium market capitalisation, whereas micro-cap invests in small, publicly traded companies.


  • Investing style equity funds – from dividend growth funds to value funds and industry-specific funds, these can be further divided into:
  1. Private equity funds: with these, you can invest in privately held companies that do not trade on the stock market.
  2. Dividend growth funds: targeting businesses with a track record in increasing dividends per share at a faster rate than the stock market, these funds can help investors make money in various ways with a firm dividend growth strategy in place. In effect, dividend growth funds have the potential to beat their higher-yielding counterparts, while they are often a good option for buy-and-hold investments.
  3. Equity income funds: similar to dividend growth funds, these are designed to bring income to the investor and not just capital growth since they invest in ownership of businesses that pay a significant dividend.
  4. Industry-specific equity funds: commonly referred to as sector funds, these invest in one area of industry such as gold funds that include gold mining stocks or technology funds to name a few. Particularly appealing to those who would like to invest in specific types of businesses, these funds can offer high appreciation potential.

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.


Some equity funds to consider for your portfolio

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.


Important factors to keep in mind


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:

  • broad diversification 
  • relatively low cost 
  • matches your investment strategy and objectives 
  • the professionals managing the fund should have a clearly defined mission so that you can understand why certain steps are taken.    

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 abouhow 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. 




* UBS Total return from 31/01/2015 to 31/01/2020 was 130.1%.


Disclaimer: The information, view and opinions provided in this article are 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. 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.

Calamatta Cuschieri Investment Services Ltd is licensed to conduct investment services business under the Investments Services Act by the Malta Financial Services Authority and is a founding member firm of the Malta Stock Exchange.