An equity investment is money that is invested in a company by purchasing shares of

that company in the stock market. These shares are typically traded on a stock
exchange.

Why should I consider equities?

Equity investors purchase shares of a company with the expectation that they’ll rise in
value in the form of capital gains, and/or generate capital dividends. If an equity
investment rises in value, the investor would receive the monetary difference if they sold
their shares, or if the company's assets are liquidated and all its obligations are met.
Equities can strengthen a portfolio’s asset allocation by adding diversification.

What are the potential benefits of equity investments?

 The main benefit from an equity investment is the possibility to increase the value
of the principal amount invested. This comes in the form of capital gains and
dividends.
 An equity fund offers investors a diversified investment option typically for a
minimum initial investment amount.
 If an investor wanted to achieve the same level of diversification as an equity
fund, it would require much more – and much more manual – capital investment.
 Investors may also be able to increase investment through rights shares, should
a company wish to raise additional capital in equity markets.

Why invest with BlackRock?

 BlackRock offers a broad selection of equity offerings across index funds
and factors (through iShares® ETFs) and active strategies through mutual
funds and SMAs. 
 BlackRock is a leader in ETF and factor investing, complemented with a strong
active franchise. 
 BlackRock offers competitively priced products across equity market exposures.

What are popular investment strategies?

BlackRock offers three distinct approaches to enhanced equity investments:
 Active equity strategies
Seek returns above the benchmark to help clients achieve financial well-being

Advantage series
Seek consistent alpha with lower levels of risk

iShares Core ETFs

See quality at an even lower cost

Active equity strategies

 Benchmark returns alone may not be enough. By seeking returns above market
benchmarks, active equity strategies may be appropriate in any portfolio – alone and
as complements to index and other strategies.
 BlackRock’s active equity managers combine human insight with innovative
technologies to help you achieve your financial goals.

Advantage series
 The BlackRock Advantage Series is managed by industry professionals and
helps investors seek outperformance at a low cost.

iShares Core ETFs

 iShares Core ETFs (exchange traded funds) are broad stock and bond index
funds designed to be long-term portfolio holdings.
 These ETFs are a low-cost and tax-efficient way to help build a strong and
diversified foundation for a portfolio.

How can I invest in equities?

Mutual fundsiShares ETFsModels and Separately Managed Accounts
Active equity offerings are organized under four distinct product ranges, each designed
to meet evolving client needs:
 Systematic alpha (For clients seeking consistent alpha with lower levels of risk)
 High conviction alpha (For clients seeking higher risk/return products)
 Specialized outcomes (For clients seeking specific outcomes, such as equity
income)
 Precision alpha (For clients seeking specific country and sector exposures)

What are Equity Accounts?

There are several types of equity accounts that combine to make up total shareholders’
equity. These accounts include common stock, preferred stock, contributed surplus,
additional paid-in capital, retained earnings, other comprehensive earnings, and
treasury stock.

Equity is the amount funded by the owners or shareholders of a company for the initial
start-up and continuous operation of a business. Total equity also represents the
residual value left in assets after all liabilities have been paid off, and is recorded on the
company’s balance sheet. To calculate total equity, simply deduct total liabilities from
total assets.
Learn more in CFI’s Free Accounting Fundamentals Course!

Types of Equity Accounts

The seven main equity accounts are:

 

#1 Common Stock

Common stock represents the owners’ or shareholder’s investment in the business as a

capital contribution. This account represents the shares that entitle the shareowners to
vote and their residual claim on the company’s assets. The value of common stock is
equal to the par value of the shares times the number of shares outstanding. For
example, 1 million shares with $1 of par value would result in $1 million of common
share capital on the balance sheet.

#2 Preferred Stock

Preferred stock is quite similar to common stock. The preferred stock is a type of share
that often has no voting rights, but is guaranteed a cumulative dividend. If the dividend
is not paid in one year, then it will accumulate until paid off.

Example: A preferred share of a company is entitled to $5 in cumulative dividends in a

year. The company has declared a dividend this year but has not paid dividends for the
past two years. The shareholder will receive $15 ($5/year x 3 years) in dividends this
year.

#3 Contributed Surplus

Contributed Surplus represents any amount paid over the par value paid by investors
for stocks purchases that have a par value. This account also holds different types of
gains and losses resulting in the sale of shares or other complex financial instruments.

Example: The company issues 100,000 $1 par value shares for $10 per share.
$100,000 (100,000 shares x $1/share) goes to common stock, and the excess $900,000
(100,000 shares x ($10-$1)) goes to Contributed Surplus.

#4 Additional Paid-In Capital

Additional Paid-In Capital is another term for contributed surplus, the same as described
above.

 
#5 Retained Earnings

Retained Earnings is the portion of net income that is not paid out as dividends to
shareholders. It is instead retained for reinvesting in the business or to pay off future
obligations.

#6 Other Comprehensive Income

Other comprehensive income is excluded from net income on the income statement
because it consists of income that has not been realized yet. For example, unrealized
gains or losses on securities that have not yet been sold are reflected in other
comprehensive income. Once the securities are sold, then the realized gain/loss is
moved into net income on the income statement.

#7 Treasury Stock (Contra-Equity Account)

Treasury stock is a contra-equity account. It represents the amount of common stock

that the company has purchased back from investors. This is reflected in the books as a
deduction from total equity.