Stock Mutual funds are referred to the professional management of the funds that are collected from several investors. This collection of money is known as pool and these are invested in stocks, bonds, securities and short-term money market instruments. The professional that does the management of the funds are known as fund managers and they are the one that trades the pooled money on regular basis.
Several types of funds are available and one such is known as the Growth Fund. Growth funds are referred to the funds that promise growth to one’s investment. In this case the funds are invested in what is termed as Growth Stocks. The Growth Stocks are generally referred to the stocks of companies that have newly entered in the market and are expected to grow in the future.
Growth funds are also referred as the nest egg funds and its main focus is always at the equities, which are known to pay off quickly in smaller amounts. Growth funds are also known for stability and offers growth to the return on investments. It is also known for diversification as well. Stock Mutual funds offer a long term investment option with a great deal of flexibility for the investor. There are certain facts that need to be considered before investing in a stock mutual fund. The factors are as follows:
- These are highly speculative and therefore the risk levels are also very high. Sometimes a new corporate entity fails to produce at the expected level. In that case a person must do proper enquiry before investing in a mutual fund.
- Sometimes the expected growth can explode exponentially, which would lead to the increase in value at a dramatic rate.
- Sometimes it takes plenty of time for a growth fund to meet the level of expectations of its investors. Therefore investors must never loose their patience.
- Sales and administrative fees are mostly associated with the mutual funds.