Growth Funds

Growth Funds are funds that appreciate in value and yield a high return on equity (ROE). Growth funds invest in stocks of companies that the portfolio managers believe have the greatest potential for long-term growth. They could include companies in fast-growing industries like technology and healthcare, or established companies that have showed continued strength. The goal is to provide capital appreciation for the fund’s shareholders over the long term. A mutual fund whose aim is to achieve capital appreciation by investing in growth stocks. They focus on companies that are experiencing significant earnings or revenue growth, rather than companies that pay outdividends. Growth managers are willing to take more risk and pay a premium for their stocks in an effort to build a portfolio of companies with above-average earnings momentum or price appreciation. Growth funds are more volatile than more conservative income or money market funds. They tend to rise faster than conservative funds in bull (advancing) markets and to drop more sharply in bear (falling) markets.Therefore these funds are usually more turbulent in up and down years for the stock market. A growth fund is best for younger people or investors willing to assume some degree of risk.