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Search the web and review the performance of funds for various categories
Search the web and review the performance of funds for various categories. Choose two or three that meet your goal needs. Enter your findings in the following chart: Suitable Investment Option? Type of Stock Mutual Fund Growth Reasoning Small Cap Mid Cap Dividend Balanced Growth and Income (select Canadian Equity Balanced or Canadian Fixed Income Balanced) Sector Intemational ment lanning
Expert Solution
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
| Type of Stock Mutual Fund | Suitable Investment option | Reasoning |
| Growth | Axis Bluechip Fund - Growth | 1.High returns 2. Ideal for medium investment horizon 3. High risk-high return |
| Small Cap | SBI Small Cap Fund | 1. Offers broader universe for investment 2. Offer better growth prospects 3. Tends to grow faster than midcap and largecap stocks |
| Mid Cap | Invesco India Mid cap fund | 1. Faster earnings growth than large cap companies 2. Better positioned to derive greater benefit during economic revivals |
| Dividend | Franklin India Opportunities Fund | 1. Regular payouts 2. Less risk 3. NAV does not increase much |
| Balanced growth and Income | ICICI Prudential Balanced Advantage Fund | 1. Lower volatility 2. Combines capital appreciation, capital preservation and volatility control 3. Regular income through exposure to fixed income instruments |
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