Growth Funds

Primary objective of growth funds is capital appreciation. They invest in a portfolio of equity securities which have long term growth potential. Hence the current income would be low for growth funds. The aim of growth funds is to earn above average returns for their investors. The companies in the portfolio of a growth fund are usually in growing /expansion stage and are expected to distribute no dividends.

Since there is always an uncertainty involved in long-term growth they are considered to be more risk-prone. The time horizon for investment is considerably high compared to other funds.

Growth funds are suitable for investors who can afford to assume the risk of potential loss in value of their investment in the hope of achieving substantial and rapid gains. Some funds of this category are more speculative with less research which can bring higher profits or heavy losses. They rise more than other funds in bull markets and fall heavily in bear markets.
 

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November 9, 2009 | Filed Under Mutual Funds 

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