Capital Growth Strategy


DEFINITION of 'Capital Growth Strategy'

An asset allocation strategy that seeks to maximize capital appreciation, or the increase in value of a portfolio or asset over the long term.

BREAKING DOWN 'Capital Growth Strategy'

Portfolios with the goal of capital growth consist mainly of equities. The exact proportion of equities to the total portfolio will vary according to the individual investor's investment horizon, financial constraints, investment goals and risk tolerance.

In general, a capital growth portfolio will contain approximately 65-70% equities, 20-25% fixed-income securities and the remainder in cash or money market securities. While seeking high returns, this mixture still somewhat protects the investor against a severe loss in portfolio value if the higher-risk equity portion of the portfolio takes a plunge.

Note that an aggressive portfolio strategy also aims to maximize capital growth, but of the total portfolio value, these strategies are of considerably higher risk; sometimes consisting entirely of equities!

  1. Strategic Asset Allocation

    A portfolio strategy that involves setting target allocations ...
  2. Money Market

    A segment of the financial market in which financial instruments ...
  3. Capital Appreciation

    A rise in the value of an asset based on a rise in market price. ...
  4. Asset Allocation

    An investment strategy that aims to balance risk and reward by ...
  5. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
  6. Fixed-Income Security

    An investment that provides a return in the form of fixed periodic ...
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