The equity stock shares which are usually invested in some fast growing companies are called growth mutual funds. The investments in these are highly volatile and carry high risk. The value of stock can increase steeply in the stock markets one day and could rapidly fall the next day. These growth mutual funds are good instruments as long term investments.
We can categorize the growth mutual funds in four kinds- crossover funds, aggressive growth funds, balanced funds and capital appreciation funds. The investment in aggressive growth mutual fund is risky as compared to other growth funds as they are highly volatile. The investment in balanced fund can be made in the form of short term bonds, bonds, preferred stocks and common stocks.
These balanced funds give a regular income apart from the long term capital gains. They carry negligible risk mutual fund investment. The capital investment funds are also a form of risky investment. You can make investment in crossover funds in both private and public sectors of the equity.
The asset allocation plays a major role in getting you good returns on your investments. After you confirm the credibility, status of the company, you can finalize the asset you would want to get invested into. Make it a point to never invest in a single asset as it is risky and you may suffer immense losses if the prices nosedive.
It is always wise to divide your available finance into different assets like bonds, stocks, or funds to lessen the risk. If there is a fall in the asset value of few funds, you can possibly earn from still other assets in your portfolio. It is therefore very important to scatter your risks and thus gain stability on your investment returns.
An in-depth research on different funds and their promoters is necessary as it helps you in gathering more information on the investment status in the market. You can also consult your financial advisor or fund manager, if you are a new to the world of growth mutual fund investing.