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Thursday, 10 March 2011

Growth Fund-What does it mean?

A diversified portfolio of stocks that has capital  appreciation as its primary goal, with little or no dividend payouts. Dividend or income distribution  for growth funds will be incidental. Portfolio companies would mainly consist of companies with  above-average growth in earnings that reinvest their earnings into expansion, acquisitions, and/or research and development. Most growth funds offer higher potential capital appreciation over medium to long-term period but usually at above-average risk. Growth funds are  more volatile than funds in the value and blend categories. The companies in a growth fund portfolio are in an expansion phase and they are not expected to pay dividends. Investing in growth funds requires a higher tolerance for risk and a holding
period with a time horizon of five to 10 years.

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