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Investing in equities has the potential to generate higher returns in the longer term than other investments, such as bonds, helping you meet your long-term investment objectives.

Contact our Charities team

Email us:

General enquiries: 0800 917 4472

Richard Macey
Director of Charities

Tel: 020 7548 3731

Go to our contacts page

The value of investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested.

Equities are shares of ownership in a company. When you buy equities, also known as shares, you‘re effectively becoming a part owner of that business. The fortunes of that company will be reflected in its share price.

When the company does well, the price of your shares may go up. When it does poorly, that price may fall. Identifying a good company at the best time to invest is one of the essential skills of a good fund manager.

You can earn a return from investing in equities in two ways:

  • When you sell the shares for a higher price than your purchase price
  • When you receive dividends from the company whose shares you own

Dividends are paid out to a company’s shareholders at set times of the year. They generally represent a share in the profits of the company and will vary depending on the company’s business strategy and how well it is doing.

The board that runs the company will decide how much profit to pay out as a dividend to its shareholders and how much profit to reinvest into the company to drive future growth.

If you hold the shares directly, any dividends will be paid to you as the shareholder, but if you’ve invested in equities via an investment fund, the dividends are paid to the fund. The managers of the fund may decide to pay an annual dividend to investors.

As an investor in a fund, you can choose whether you want to:

  • receive any dividend distributions as a regular income; or
  • have your distributions reinvested into the fund

Creating the potential for higher returns

Many charities use a bank or building society deposit account to save. However, saving in this way only provides a small amount of interest, particularly at current interest rate levels, and no capital growth.

By contrast, investing in the stockmarket over the long term has historically outstripped the returns provided by a bank or a building society and so may provide a better way to meet your charity's investment objectives.

When you buy equities, also known as shares, you are buying a part of the company. All companies are subject to market forces, such as competition and external market forces, and their share prices can grow or decline as a result. This means that your charity's investment will grow or decline in line with the share price of the company. Equities can enjoy higher returns in the longer term than other investments such as bonds or cash, but they may also be subject to higher risk.

When your charity invests in an M&G equity fund, it's investing in all the companies held within that fund. The risk of investing in the stockmarket is therefore reduced because your charity's investment is spread across a number of companies rather than being held in just one company.

In a bank or building society up to £75,000* of the money you save is secure as part of the Financial Services Compensation Scheme. The same is not true for an investment in the stockmarket. When investing in equities remember that you may not get back the amount you originally invested.

* Up to £75,000 of your money is secure in a bank or building society, unlike a stocks and shares or fixed interest investment (Financial Services Compensation Scheme as at 01.01.2016)

The case for equities

At M&G, we believe the case for long-term equity investing is as compelling as ever. Even in tough economic times, companies with solid business models and strong cash-generation prospects are likely to enjoy a competitive advantage

In our view, the best returns from equity investments come from companies with clear corporate strategies, strong finances and hard-to-replicate assets.

Above all, the companies in which we invest must have experienced and talented management that can see them through market downturns.

Our fund managers therefore look for companies with management teams we trust and sound plans for future growth.

Equity funds for charities


Recovery Fund

Global Dividend Fund

Global Select Fund

Contact the M&G Charities Team if you’d like to learn more about other available funds.

We are unable to give financial advice. If you are unsure about the suitability of your investment, speak to your financial adviser.

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