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Growth funds are a type of stock fund structured to
appreciate over time. These funds invest primarily in the common stock
of corporations that show high potential for growth. Growth funds
may realize their objectives by choosing businesses with a
particular capitalization (or cap). Small-cap
businesses are small companies that grow quickly. Mutual funds that
invest in these businesses are unlikely to pay dividends to their
customers because small-cap businesses stress growing in value as
their top priority. Large-cap businesses are larger, more
established companies (many are also blue chip stocks) that may
grow less rapidly. They tend to have large amounts of assets and
cash on hand to protect themselves against economic downturns. Some
examples are IBM and General Electric. The mid-caps are
medium-sized companies with good growth potential. Some also have the
long history of the large caps.
Aggressive-growth funds are similar to growth funds. The
major difference is that aggressive-growth portfolios are more
strongly growth-oriented. Aggressive-growth funds often choose the
common stock of small, promising companies. They may also use
investing techniques like options writing and frequent trading to
maximize their growth possibilities. |
