Often a distinction between different types of equity categories is made. Once shares have been identified as a certain type of equity this facilitates the link to the right investor profile and investment style.
Types of shares
Generally, shares are typified as:
- Value shares: securities trading under their intrinsic value;
- Growth shares: securities of a company which is expected to grow at an above-average rate compared to its industry or the overall market;
- GARP (Growth At a Reasonable Price): A combination of value and growth investing;
- Index shares: shares that allow investors to have a stake in an index without having to purchase each individual stock that comprises it;
- Yield shares: Shares which have an interesting dividend yield (= annual dividends per share / price per share).