A growth fund is a mutual fund which invests in the stocks of the companies which are expected to grow at a rate faster than the overall stock market. The primary goal of growth funds is capital appreciation. They do not seek to invest in the stocks of the companies which have high-dividend payouts (this is the prime focus of dividend-yield funds). Nor do they go after value stocks – companies which have relatively undiscovered potential.

Features of Growth Fund

• High Returns: Growth funds invest in high-growth stocks. These are typically the companies which are growing faster than the market and which are rapidly growing their earnings.

• Ideal for Medium Investment Horizon: Growth funds are an ideal investment instrument for investors who want to invest their money for a medium to long term (more than 3 years). Investors willing to remain invested for an even longer tenure (more than 5-7 years) should ideally choose value funds.
• High Risk: Growth funds are a high-risk investment instrument as their performance heavily depends on volatile stock market conditions