EQUITY FUNDS

WHAT IS AN EQUITY FUND?

An equity fund, also known as a stock fund, invests primarily in the shares of publicly-traded companies. The main objective of most equity funds is to grow the value of your initial investment over time. There is a wide variety of equity funds available. These funds can focus on certain geographic regions of the world and/or sectors of the economy. They can also use different ways to select stocks for their portfolios.

There are two types of equity funds – equity mutual funds and equity exchange-traded funds (ETFs).

EQUITY MUTUAL FUNDS

Equity mutual funds allow you to pool your money with other investors to buy a portfolio of stocks. Most mutual funds allow you to buy and sell your fractional share of the portfolio based on the fund’s net asset value per unit.

EQUITY ETFs

ETFs are traded on public exchanges, similar to stocks, at prevailing market prices. Just like mutual funds, there is a broad range of equity ETFs to choose from, including country-, region-, and sector-specific ETFs.

WHY INVEST IN AN EQUITY FUND VERSUS INDIVIDUAL STOCKS?

Diversification:

For a very modest amount of money, you can spread out your risks by attaining a level of diversification that you may not be able to achieve on your own.

Professional Management:

There are thousands of stocks to choose from. It can be daunting if you have limited time, resources and experience to select/monitor stocks and build your portfolios. For relatively low fees, your investment in an equity mutual fund or ETF can give you access to the expertise of professional investment professionals.

Convenience:

Buying and selling funds is quick and easy. Like many Canadians, you can choose to work with a qualified advisor to align your investments with your long-term goals and the level of risk you are comfortable with.

Additionally, you can automate the process of making additional investments to your funds, reinvesting distributions, and taking income through regular withdrawals. Access to information on your funds’ investment objectives, purchase options, expenses, performance, portfolio holdings, and daily pricing is readily available on our website.

TYPES OF EQUITY FUNDS

BY GEOGRAPHY OR SECTOR

There are many different funds to choose from. Some funds will have a geographic or sector focus.

Global Funds

These funds invest in stocks based in markets around the world, giving you access to a wide variety of opportunities.

Regional/Country Funds

Regional or country funds provide equity investors with exposure to specific geographic areas such as Canada, the U.S., Japan and Europe.

Emerging Markets Funds

These funds tend to invest in companies that are based in (or benefit from) some of the fastest growing economies in the world, including China, South Korea and India.

Sector Funds

These funds allow you to tap into the growth potential or diversification benefits of specific sectors of the economy.

BY INVESTMENT APPROACH

In addition to selecting equity funds based on their geographic or sector focus, you can also choose funds based on the investment approach used to select their stocks.

Growth Funds

Growth funds invest in companies that the portfolio managers believe are growing – and will continue to grow – faster than the rest of the market.

Value Funds

Value funds invest in companies that the portfolio managers believe are undervalued based on their assessment of the companies’ worth today or in the future. The funds will benefit when others recognize the benefits of these investments and the stocks can be sold at a profit.

Growth at a Reasonable Price (GARP) Funds

As the name implies, GARP funds select stocks using a process that combines elements of growth and value investing.

Smart Beta Funds

Smart Beta funds hold stocks that tend to be identified using quantitative screening methods. The screening method used will be based on the fund’s objective and the criteria that the investment team believes will help to achieve that objective.

Passive Funds

Passive funds are designed to mimic a benchmark or index. In other words, a passive fund will tend to hold the same stocks (in the same percentage weightings) as that benchmark. The fund will perform similar to the benchmark on both the upside and downside. Because there is no active, professional management involved, these funds typically have lower fees than other fund options.

FEATURED EQUITY MUTUAL FUNDS & ETFs

Canadian Equity

U.S. Equity

Global & International Equity

Emerging Markets Equity

HOW TO INVEST IN EQUITY FUNDS

Talk to your advisor or call our Client Services team at 1 (800) 387-0830 to learn more about equity funds and Franklin Templeton’s range of mutual funds and ETFs.