These are stocks of a company that has a high expected growth rate in relation to the previous year’s performance. They are, however, priced higher than other funds due to the high probability of high yields. They also have records of high earnings irrespective of harsh economic conditions. One downside, however, is the high risk involved. This is because the prices could fall at a high rate due to factors such as negative news regarding a company.
Growth funds come in portfolios such as large, small, mid, micro capitalization and diversified equity funds. While large-cap growth funds have high growth record and invest in the biggest players in the economy, small and mid-cap funds incorporate small and medium players that have a high possibility of growth.
