Growth Fund

What is a 'Growth Fund'

A growth fund is a diversified portfolio of stocks that has capital appreciation as its primary goal, with little or no dividend payouts. Portfolio companies would mainly consist of companies with above-average growth in earnings that reinvest their earnings into expansion, acquisitions, and/or research and development.

BREAKING DOWN 'Growth Fund'

Most growth funds offer higher potential capital appreciation but usually at above-average risk. Growth funds are more volatile than funds in the value and blend categories. The companies in a growth fund portfolio are in an expansion phase and they are not expected to pay dividends. Investing in growth funds requires a tolerance for risk and a holding period with a time horizon of five to 10 years.

RELATED TERMS
  1. Growth Stock

    Shares in a company whose earnings are expected to grow at an ...
  2. Capital Appreciation Fund

    A mutual fund that attempts to increase asset value primarily ...
  3. Capital Growth

    The increase in value of an asset or investment over time. It ...
  4. Growth And Income Fund

    A mutual fund or ETF that has a dual strategy of capital appreciation ...
  5. Capital Growth Strategy

    An asset allocation strategy that seeks to maximize capital appreciation, ...
  6. Dividend Payout Ratio

    The percentage of earnings paid to shareholders in dividends. ...
Related Articles
  1. Mutual Funds & ETFs

    The Top 5 Large Cap Growth Mutual Funds for 2016

    Understand how growth investing through mutual funds presents an opportunity for investors, and learn the best growth mutual funds for 2016.
  2. Retirement

    Top 5 Oppenheimer Funds for Retirement Diversification in 2016

    Discover the top five Oppenheimer Funds for diversifying your retirement savings. Learn how to balance your portfolio for maximum safety and return.
  3. Mutual Funds & ETFs

    The 5 Best American Funds

    Discover five of the best-performing mutual funds offered by American Funds, based on the funds' five-year average annualized returns.
  4. Mutual Funds & ETFs

    The Top 5 Small-Cap Growth Mutual Funds for 2016

    Understand how small-cap growth stocks fit into an investor's portfolio, and learn the best mutual funds in the category to consider for 2016.
  5. Mutual Funds & ETFs

    The Best 8 Funds For Regular Dividend Income

    Here's a list of the top mutual funds which pay regular dividends, for frequent income.
  6. Mutual Funds & ETFs

    Value Vs. Growth ETFs: How Do You Choose?

    Learn about the primary characteristics of value ETFs and growth ETFs, and discover how to choose the between the two when building a portfolio.
  7. Mutual Funds & ETFs

    Top 5 American Funds for Retirement Diversification in 2016

    Discover five mutual funds from industry leader American Funds with high yields that are perfect for retirement savings diversification.
  8. Mutual Funds & ETFs

    4 Mutual Funds that Hold Tesla Stock (TSLA)

    Obtain information on the four mutual funds that have significant allocations to Tesla Motors, Inc. in their major portfolio holdings.
  9. Mutual Funds & ETFs

    The 4 Best American Funds for Growth Investors in 2016

    Discover four excellent growth funds from American Funds, one of the country's premier mutual fund families with a history of consistent returns.
  10. Mutual Funds & ETFs

    The Top 5 Retirement Income Equity Mutual Funds for 2016

    Find out the top five retirement income-equity mutual funds for generating solid total returns for your retirement-income portfolio.
RELATED FAQS
  1. What is the incentive to buy a stock without dividends?

    While dividends are the only direct income (money paid out), the total return of holding, a stock is the dividend plus the ... Read Answer >>
  2. Which option is better on a mutual fund: a growth option or a dividend reinvestment ...

    When selecting a mutual fund, an investor has to make an almost endless number of choices. Among the more confusing decisions ... Read Answer >>
  3. What causes dividends per share to increase?

    Learn what the major factors are that can lead to changes in a company's dividend payouts and drive increases in dividends ... Read Answer >>
  4. What are some possible red flags in a company's dividend payout ratio?

    Read about how investors and analysts use the dividend payout ratio to scrutinize the sustainability of a company's dividend ... Read Answer >>
  5. What is the difference between a blend fund and a balanced fund?

    As both "blend"and "balanced" describe the particular asset mix of mutual funds, determining the exact distinctions between ... Read Answer >>
  6. Should mutual fund dividends be reinvested?

    Learn the advantages and disadvantages, as well as the tax impact, of having your mutual fund dividends automatically reinvested ... Read Answer >>
Hot Definitions
  1. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  2. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  3. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  4. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  5. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  6. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
Trading Center