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What is an equity fund?

Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise.

Equity funds can enhance returns
Companies’ shares, or equities, are a staple element in the portfolios of most investors looking to optimise their returns over the longer term. Using an equities fund can enhance returns over the longer term, such as five years or more.

Equities might pose the higher risks of the three main asset classes, which also include bonds and cash, but over time they have a proven record of providing returns that beat inflation - you just need to be patient and disciplined to benefit.

These higher risks can be addressed by diversification, which means investing across a broad range of assets rather than just a few. This reduces the risk that a portfolio’s performance could be dragged down by too much exposure to a few bad stocks. It also increases the chances of benefiting from the returns of the best stocks.

The benefits of using funds
A good way to invest in equities is via an investment fund. This is an investment product that pools monies from a lot of investors and invests in a diversified range of assets. If you feel you do not have the time, knowledge or inclination to manage your own portfolio of investments, you can delegate this to a professional fund manager. 

By investing even just a few hundred pounds in an equity fund, you can usually obtain exposure to far more equities than you can by investing directly in the market yourself. In addition, funds enable you to gain access to an array of geographical markets and industry sectors around the world.

Investing in funds will usually involve taking on a certain degree of risk. Learn more about understanding your risk profile here.

Funds offer tax benefits, too. In the UK, switches between shares within funds are free of capital gains tax (CGT) for the saver. This is not the case if you manage a portfolio of shares unless these are held in tax efficient wrappers such as Individual Savings Accounts (ISAs). We suggest you consult a professional adviser about the tax implications of your investments.

Liontrust funds
The funds offered by Liontrust are actively managed, so the manager will select which equities to buy and sell and what weightings to give to each stock.

Selecting equity funds can be a challenge, if in doubt, you can seek the professional advice of a qualified financial adviser.

Understand common financial words and terms See our glossary

How to invest in Liontrust funds

Through a fund platform
Through a financial adviser
Direct with Liontrust