Equity investments & Foreign Equity Investment

An equity investment generally refers to the buying and holding of shares of stock on a stock market by individuals and firms in anticipation of income from dividends and capital gains. Typically, equity holders receive voting rights, meaning that they can vote on candidates for the board of directors (shown on a diversification of the fund(s) and to obtain the skill of the professional fund managers in charge of the fund(s)). An alternative, which is usually employed by large private investors and pension funds, is to hold shares directly; in the institutional environment, many clients who own portfolios have what are called segregated funds, as opposed to or in addition to the pooled mutual fund alternatives.

A calculation can be made to assess whether an equity is over or underpriced, compared with a long-term government bond. This is called the yield gap or Yield Ratio. It is the ratio of the dividend yield of an equity and that of the long-term bond.

Foreign Equity Investment: A foreign portfolio investment is a grouping of assets such as stocks, bonds, and cash equivalents. Portfolio investments are held directly by an investor or managed by financial professionals. In economics, foreign portfolio investment is the entry of funds into a country where foreigners deposit money in a country's bank or make purchases in the country’s stock and bond markets, sometimes for speculation.

Most foreign portfolio investments consist of securities and other foreign financial assets that are passively held by the foreign investor. This does not provide the foreign investor with direct ownership of the financial assets and can be relatively liquid depending on the volatility of the market that the investment takes place. Foreign portfolio investments can be made by individuals, companies, or even governments in international countries. This type of investment is a way for investors to diversify their portfolios with an international advantage.

Foreign portfolio investment shows up in a country's capital account. It is also part of the balance of payments which measures the amount of money flowing in and out of a country over a given time period.

Foreign Portfolio Investment (FPI) is an investment by non-residents in Indian securities including shares, government bonds, corporate bonds, convertible securities, infrastructure securities etc. The class of investors who make investments in these securities are known as Foreign Portfolio Investors.