A growth fund is a portfolio of securities whose investment goal is to grow in value over time. A growth fund invests primarily or fully in stocks, as stocks have the potential to appreciate greatly. It is common for the companies in a growth fund to avoid paying dividends to their shareholders; they are more likely to reinvest those dividends to finance their growth. The stocks in a growth fund are generally volatile, because volatile stocks have a high appreciation potential. Investors who choose a growth fund may have a high risk tolerance, and they generally do not seek income from the fund. The opposite of a growth fund is an income fund, which focuses on paying its shareholders income. |
