100% Equities Strategy

A 100% equities strategy allocates a portfolio’s investable assets solely to stocks. It generally involves long positions in equities—publicly listed shares, over-the-counter stocks, or private equity—without holdings in bonds, cash equivalents, or other asset classes. Such strategies are common among mutual funds and other pooled vehicles that focus exclusively on equities.

Key takeaways

• A 100% equities strategy invests only in stocks and typically avoids bonds, derivatives, short selling, and margin.
• Many funds document an “at least 80% equities” mandate for regulatory flexibility, though actual equity exposure is often 90–100%.
• Substyles include growth, value, income, and market-cap-focused approaches (large-, mid-, small-cap).
• All-stock portfolios can reduce company-specific risk through diversification but remain exposed to market risk; they suit investors with higher risk tolerance and longer time horizons.

How it works

Portfolios using this strategy select investments exclusively from the stock universe. In practice, managers keep some cash or cash equivalents on hand for operating needs and transactions, so regulatory or registration statements often state an 80% minimum equity target rather than an absolute 100% allocation. The strategy also typically avoids more complex or risky techniques—such as extensive use of derivatives, short selling, or leverage—favoring a traditional, long-only equity approach.

Special considerations and risks

• Equities are generally more volatile than bonds, cash, or money-market instruments.
• Diversification across sectors and issuers can reduce idiosyncratic (company-specific) risk but cannot eliminate systemic market risk.
• Investors should assess time horizon, risk tolerance, and investment objectives—many financial plans recommend combining equities with fixed-income holdings to smooth volatility and preserve capital.

Common 100% equity strategy types

These substyles reflect different objectives and risk profiles within an all-equity allocation.

Growth
* Targets companies with above-average expected revenue and earnings growth.
* Often includes emerging technologies and companies reinvesting earnings to expand.
* Typically higher volatility and higher expected long-term returns.

Value
* Focuses on stocks perceived to be undervalued relative to fundamentals.
* Uses metrics such as price-to-earnings (P/E), price-to-book (P/B), and free cash flow to identify opportunities.
* Appeals to investors seeking long-term core holdings with potential for price appreciation as valuations normalize.

Income
* Seeks current income through dividends and distributions.
* Emphasizes mature, dividend-paying companies and income-generating equity structures such as REITs and master limited partnerships (MLPs).
* Suited to investors prioritizing cash flow from equities rather than purely capital appreciation.

Market-cap strategies
* Large-cap: Established companies with lower volatility and often steady dividends.
* Mid-cap: A balance of growth potential and relative stability.
* Small-cap: Higher growth potential but higher risk and volatility, often in earlier development stages.

Who it suits

A 100% equities strategy is appropriate for investors with:
* Long investment horizons (e.g., decades to retirement)
* High risk tolerance and willingness to accept short-term volatility
* Primary goals of capital appreciation or equity-focused income

Conclusion

A 100% equities strategy offers concentrated exposure to stock market returns and can be tailored by style (growth, value, income) and market-cap focus. While diversification within equities reduces company-specific risk, the portfolio remains vulnerable to broad market swings. Investors should weigh their objectives and risk tolerance and consider whether a blended asset allocation might better meet their long-term goals.

Sources: U.S. Securities and Exchange Commission materials on REITs and master limited partnerships.