What is an equity fund?

What is an equity fund?
As Gert has explained in our video, an equity fund is a higher risk investment made up of various shares and stocks in an attempt to provide the investor with the maximum return possible over a period of time. Equity funds are known for their higher amount of volatility (ups and downs) and is fully market dependent but the returns offered by equity is far greater than any other asset class!

In the graph we have provided there is an example of the suggested Wealth Creators equity fund over a period of time (over 7 years). We have inserted a standard money market on the graph to clearly emphasize the difference in return as well as the difference in volatility! As explained in the video clip, the average returns are in excess of 15% p.a with a suggested minimum investment term of at least 5 years!

Equity funds are one of the higher costing investments available in the market. This is due to the intense level of constant management and attention required to manage this asset class – but the returns far outweigh the costs!

Is than any risk at all?
Yes, there are higher risks when investing in equity. The funds are fully dependant on the market and can be flat with little or even negative returns for a period of time, sometimes as long as 3 years! The distinction between changes in value and a loss of investment funds must be understood when investing in equity and remember the only time you realise a loss is to sell out of the holding, until then it is only variations in value!

Should you invest in an Equity fund?
There are multiple variables to consider when deciding on what your portfolio should look like – such as what is the purpose of the investment? What is the time horizon? What are the tax implications? All of these can be explained to you by one of our expert financial planners and a customized solution can be developed just for you!

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