Capital Appreciation Fund

A capital appreciation fund is a mutual fund that is structured to gain the maximum amount of growth possible. To achieve this, a capital appreciation fund selects high-growth investments, usually small-cap stocks. A capital appreciation fund tends to be volatile and high-risk. A typical capital appreciation fund is involved in sectors that typically show potential for high growth, such as technology. A capital appreciation fund may also be called a small-cap fund, aggressive-growth fund, or growth fund. A capital appreciation fund usually pays little or no dividends, instead investing in companies that reinvest earnings to finance future growth. A capital appreciation fund is suited to those who can tolerate risk and are willing to forgo current income for the potential of future growth.