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A growth fund is a type of
mutual fund that aims to achieve long-term growth of principal, not to earn current income
for its investors. Growth fund portfolio managers invest in the stocks of companies they
believe will grow faster than average. Historically, growth funds have produced higher
long-term returns than growth and income funds, but they are more vulnerable to short-term
fluctuations.
Growth funds are a good choice for an investor with a long time horizon who doesn’t
mind short-term fluctuations.
You should remember that, as a rule, it is never a good idea to invest in any fund until
you read its prospectus and understand the risks involved.
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