Monday, December 27, 2010

Growth Fund

A growth fund is a fund that invests primarily in growth stocks with the objective of growing the value of the fund via capital gains. Growth stocks are companies that have good potential to grow their earnings. This includes companies that are in the growth phase, which tend to reinvest much of their earnings rather than paying dividends, in this sense the contrast between growth and income oriented investments is also highlighted. The strategy of growth funds is to capture potential upside in the form of capital gains from an increase in value of the portfolio companies as a result of strong earnings growth over time.

Synonyms: Capital appreciation fund, Equity fund, Long term fund, Growth stocks, Aggressive growth fund

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