Equities

In the context of investing, an equity is a stock or any other security representing an ownership interest. Units of stock are called shares. Corporations issue shares to raise capital, to fund their businesses.

Equities are mostly purchased for their growth potential, i.e. the investor is expecting to eventually sell their shares or units at a higher price, thereby realizing capital gains. There may also be dividends paid to shareholders along the way.

Public equities are stocks that trade on an exchange, i.e. they are part of the stock market of a specific country. Public equities are typically liquid (can be sold quickly) and well known, especially those with large market capitalizations. Their financial statements are audited, and their activities followed by analysts. Public stock markets are closely watched by regulators. Public equities are accessible to all types of investors, large and small, at low cost. Therefore, equity-related articles on this wiki are primarily concerned with public equities, especially common shares traded in Canada, the US, and overseas. These are important in many portfolios, especially those with long-term objectives such as funding retirement.

Classifications

Canadian investors generally classify equities by type and/or geographically, depending on the context of their use, typically for asset allocation reasons. The following classifications are not mutually exclusive.

• Canadian equities
  • Common shares
  • Preferred shares
  • Hybrid Securities
  • Real estate investment trust
  • Split share corporation
  • Debenture
• US equities
• International equities
• Emerging markets
• Hedge funds
• Private equity
• Flow-through shares
• Warrants and Rights offerings
• Limited Partnerships

How to invest in public equities

There are a number of ways to invest in equities. Products such as exchange-traded funds and mutual funds can be used to invest in broad based coverage of these classifications. Another way to invest is to build a portfolio holding individual stocks purchased on a stock exchange, such as the Toronto Stock Exchange for Canadian equities. Most of these methods of purchasing equities require using discount brokerage account.

In a Canadian context, the four main regions of interest for public equities are Canada, the US, developed international markets, and emerging markets. They can be accessed separately or combined in an all-in-one asset allocation ETF, with or without a bond component mixed in.

Security regulators

Main article: List of Canadian security regulators

Security regulation in Canada is under provincial and territorial jurisdiction.

See also

• Asset allocation
• Portfolio design and construction

External links

• Fund Category List, from the from Canadian Investment Funds Standards Committee. Defines the standard classifications of Canadian-domiciled mutual funds.