Large cap growth funds or small cap growth funds, they are all about investing your money for your future. Stock funds, in general, are normally grouped within the size of a company. The value of the company in the stock market, whether small or big, is measured by a cap size or capitalization. The outstanding share number is multiplied by the price of the share to get to this cap size. The large cap growth funds are normally within the larger corporations and less risk is involved than the smaller ones. In order to have a well rounded and lucrative portfolio, there should be a mix of all types of funds. Doing so will allow you to level out the risks associated with small cap, midsize and large cap growth funds.
Stocks within the top seventy percent of capitalization of US equity market would be defined as the large cap growth funds. Most of the portfolios focus primarily on the companies that are in the rapidly expanding industries. The definition of their growth is based on high valuations and fast growth. Large cap growth funds are defined by cash flow, low dividend yields, high price ratios and growth rate for earnings. The larger industries tend to be a little less risky than smaller ones because of these factors.
The mid cap growth funds are about in the middle concerning risk and values. Investing in the companies with the market values up to the eight billion dollar range isn’t considered to be small or large. Therefore, the mid cap funds exhibit growth characteristics of the smaller companies while adding volatility to the funds. It is an excellent form of diversification with your funds holdings. The small cap and mid cap funds have been known to outperform the large cap growth funds in previous time periods. Experts have been adamant in their studies that remains hopeful, however, that the large cap growth funds will return to the performance levels as in the past.
Lastly, there are small cap and micro cap funds to consider when putting together your portfolio. These are much smaller companies with a much smaller market value, from below one billion for small cap and lower than $250 million dollars for the micro cap funds. A conservative investor will look for the potential for gain within the high technology and hot growth companies. There is no reason to count these smaller funds out because they have an exceptional potential for growth because of their volatility. A well rounded portfolio of investments should actually include all of the types; small, mid cap and large cap growth funds.