What is a 'Capital Appreciation Fund'

A capital appreciation fund is a fund that attempts to increase asset value primarily through investments in high growth and value stocks. These funds may also be called aggressive growth funds, capital opportunity funds or capital gain funds.

BREAKING DOWN 'Capital Appreciation Fund'

Capital appreciation funds are a good option for investors willing to take on some additional risks for the potential benefit of above-average market returns. They typically appeal to aggressive investors. Investment strategies can range broadly across the fund category, however most funds will be primarily invested in a mix of value and aggressive growth stocks. These funds are generally more moderate in their investment holdings than aggressive growth stock funds, investing for both long- and short-term gains with growth and value. These funds can be a good fit for moderate investors seeking equity market allocations since they usually invest from a broad market equity universe. They can also provide consistent exposure to the equity markets with steady capital appreciation over time. Therefore, they can be a good long-term core holding for a moderate to aggressive portion of an investment portfolio.

Capital Appreciation Fund Strategies

As the name suggests, capital appreciation funds seek to deliver value to shareholders by investing in companies they believe to have appreciating share prices. Therefore, they are heavily weighted toward equities. They often take aggressive bets on growth stocks while also balancing the portfolio with value stocks and a mix of conservative investments for capital preservation. With capital appreciation as the primary goal, these funds typically have a broad equity universe from which they invest. Most often, investments will target specific regions of the world, with numerous funds investing in U.S. equities.

Risks of Capital Appreciation Funds

Capital appreciation funds may generally have higher risk characteristics than passive index investments and standard value stock funds. They offer the potential for above-average market returns with the benefit of diversification through active management. This gives investors exposure to a wide range of equity investments. These funds can have broad mandates and flexible investment objectives that may require added due diligence by investors.

Capital Appreciation Fund Offerings

Numerous capital appreciation funds are available across the investment market. BlackRock’s Capital Appreciation Fund offers management from one of the largest investment managers in the world.

BlackRock Capital Appreciation Fund

The BlackRock Capital Appreciation Fund invests in U.S. growth stocks while seeking a balance of growth and risk. The Fund is benchmarked to the Russell 1000 Growth Index. In 2017, it outperformed the Russell 1000 Growth Index with a return of 32.59%.

RELATED TERMS
  1. Capital Gains Exposure - CGE

    An assessment of the extent to which a stock fund or other similar ...
  2. Capital Growth

    Capital growth is the appreciation of the value of an asset over ...
  3. 100% Equities Strategy

    A 100% equities strategy is an investment strategy for an individual ...
  4. Structured Funds

    Structured funds are a type of fund that combines both equity ...
  5. Capital Guarantee Fund

    A capital guarantee fund is an investment in which the investor's ...
  6. Exchange Fund

    A fund that lets an investor diversify their concentrated stock ...
Related Articles
  1. Investing

    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.
  2. Investing

    FAVFX: The Top All Cap Value Mutual Funds

    Understand the benefits of investing in value stocks across all market cap categories, and learn the best all-cap value mutual funds for 2016.
  3. Retirement

    Top 5 JPMorgan Funds for Retirement

    Discover five J.P. Morgan mutual funds that provide high returns and excellent diversification of retirement savings. Learn how to allocate assets properly.
  4. Financial Advisor

    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. Financial Advisor

    CWGIX: Overview of Capital World Growth & Income Fund

    Learn about the American Funds Capital World Growth and Income Fund, a world stock fund that seeks quality stocks on any of the world's largest exchanges.
  6. Investing

    Meet Your Investment Objectives With Income Funds

    Discover the categories of income funds and the types of investors for whom they are appropriate.
  7. Investing

    How Mutual Fund Managers Pick Stocks

    Learn about how mutual fund managers choose stocks based on the type of funds they manage and the investment goals of the funds' shareholders.
Hot Definitions
  1. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  2. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
  3. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
  4. Monte Carlo Simulation

    Monte Carlo simulations are used to model the probability of different outcomes in a process that cannot easily be predicted ...
  5. Price Elasticity of Demand

    Price elasticity of demand is a measure of the change in the quantity demanded or purchased of a product in relation to its ...
  6. Sharpe Ratio

    The Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk.
Trading Center