Aggressive Growth Mutual Funds

Not for the faint hearted! Having said that, Aggressive Growth Mutual Funds have their typical investors not necessarily limited to people with money to invest and itchy fingers but in the broader perspective, attractive to people who are not risk averse but most importantly, those who lack the know-how or experience to be investing by themselves.

By definition, as the name suggests, Aggressive Growth Mutual Funds are aggressive in their investment strategy and seek to achieve maximum growth rate. However, the inherent risks are also high since they don’t normally indulge in hedging or arbitrage trading and go straight for the kill.

To give you an example, let’s take a stock - scrip, XYZX, that is expected to be in the news with some good news for it reminds one about the famous Jeffrey Archer book Not a Penny More, Not a Penny Less.

If the news is good, the stock price may soar and of otherwise, the stock price may not do so well. Cases such as these are what Aggressive Growth Fund managers keep their eyes open to, so they can make a good short term capital gain.

Aggressive Growth Mutual Funds have their investment options wide open and typically perform day trading in stocks, currencies and commodities, as well as in the derivatives market, as futures and options. These funds are also aggressive buyers in short-term corrections in the markets in their attempt to make the most of the falling market.

These funds also tend to invest in other countries as Institutional Investors and favor volatility that is found in some of the emerging markets as well.

These funds tend to stay away from treasury bills and government bonds as the yield and volatility in the market for these instruments is comparatively lower than the more lucrative stock, money and commodity markets.

The typical investment pattern of individual investors in Aggressive Growth Mutual Funds is where they have a decent spread in their investment portfolio comprising medium and low-risk stocks, funds and instruments and use a portion of their investment pie to attempt for a higher yield, without gambling with their life savings.

Similarly, even institutional investors can and do include Aggressive Growth Mutual Funds in their portfolio to give them the boost in growth that low-risk or risk-free investments can never manage.

The advice to the individual investor looking at Aggressive Growth Mutual Funds would typically be to study the fund’s performance over a period of time, their current portfolio before buying in and to have a portfolio that has a good balance between low and medium-risk stocks, funds and instruments alongside an Aggressive Fund, so there is a balance.