Asset Classes: Equities

What is an Equity?

An ordinary or common equity share is a tradeable financial instrument that confers partial ownership in a company’s assets. Shareholders normally have voting rights and are entitled to receive any dividends paid. Preference shares normally carry less ownership rights than ordinary shares but have priority in any dividend payments. Share prices fluctuate and in the case of publicly traded companies are listed on recognised stock exchanges where investors can buy and sell them.

Risk & Return: Equities

Share prices can move up or down and shareholders normally rank below creditors such as bondholders in the event of a company going into liquidation. However, shareholders can potentially receive gains in the form of both dividends and rising share prices.

How does the market value equities?

Company share prices fluctuations are caused by a myriad of factors. Some are dependent on the company performance (micro) and some by external factors (macro). Micro factors include operational performance and balance sheet efficiency. Macro factors include the economic and geopolitical backdrop; interest rates and regulatory changes.

 

Common valuation methods applied to equities include the price: earnings (PE) ratio which divides the company share price by its earnings per share. The lower the PE ratio the lower the value the market attaches to the companies shares. Dividend yield (DY) divides the dividend per share by the share price. The higher the DY the higher the percentage dividend pay-out per share to investors. Equities are also valued relative to other asset classes, notably bonds.

Where are equities held?

Equities will be settled in the relevant market where they are traded. They will be settled by, and held on account with, our Custodian Pershing Securities International Limited on your behalf. As your custodian, Pershing’s role is to hold your assets separately to other assets, ensuring these are protected against theft or loss. Pershing are responsible for recording transactions, reconciliation of accounts, execution of documents and reporting.

Typical Income from Equities

Equity income primarily refers to income from stock dividends, which are cash payments from companies to their shareholders as a reward for investing in their stock. They are paid quarterly, biannually or annually. Investors might also regard the sale a stock at a higher price than when bought as income. Equally if the stock is sold at a lower price, a loss is recorded.

Typical Liquidity for Equities

Investment MinimumWith fractional share trading, typically, €1 or €5
Trades ExecutedThroughout the trading day and during extended hours trading
Settlement Period2 business days (trade date + 2)

Where are costs associated with equities?

Transactional ChargesDetails/Charges
Equity/Investment FundsCommission Charges:
€0 – €20,000
€20,001 – €40,000
Balance 0.50%
Minimum €55

1.50%
1.00%
0.50%
€55
Contract Fee:
Irish/UK Nominee (Crest)
All Others

€40
€60
Warning:

The Value of your investment can go down as well as up.

Warning:

Past performance is not a reliable guide to future performance.

Warning:

Some investments are complex and may be difficult to understand. Investors should not invest without having sufficient knowledge and experience to make a meaningful evaluation of the merits and risks of investing in such products.