Definition:
An aggressive growth fund is a type of mutual fund that invests in stocks of companies that are expected to experience rapid growth in earnings and stock price. These funds are considered high-risk, high-reward investments, as they aim to achieve substantial capital gains but also carry a higher risk of loss.
Key characteristics of aggressive growth funds:
- High-risk, high-reward: Aggressive growth funds are typically considered high-risk investments, but they also have the potential for high returns.
- Focus on growth: These funds invest in companies that are expected to experience rapid growth in earnings and stock price.
- Volatility: Aggressive growth funds can be highly volatile, meaning their prices can fluctuate significantly over short periods of time.
- Diversification: While aggressive growth funds may invest in a variety of stocks, they often have a concentrated portfolio, which can increase risk.
Who should consider investing in an aggressive growth fund?
- Investors with a high risk tolerance: Aggressive growth funds are suitable for investors who are comfortable with the potential for significant losses.
- Long-term investors: These funds are typically designed for long-term investors who are willing to ride out market fluctuations.
- Investors with a high risk appetite: Investors who are seeking high returns and are willing to accept the associated risks.
It’s important to note that aggressive growth funds are not suitable for everyone. Investors should carefully consider their risk tolerance and investment goals before investing in these types of funds.
