how a growth fund works
the high risk high reward mantra of growth funds can make them ideal for those not retiring anytime soon typically investors need a tolerance for risk and a holding period with a time horizon of five to ten years growth fund holdings often have high price to earnings p e and price to sales p s multiples this trade off from investors is the above average revenue and earnings gains these companies produce types of growth fundsgrowth funds along with value funds and blend funds are one of the main types of mutual funds and exchange traded funds etfs they are more volatile than funds in the value and blend categories growth funds are typically split by market capitalization with funds representing small cap mid cap and large cap groupings large cap growth mutual funds are one of the largest types of mutual funds in terms of market share large blend funds which offer investors value and growth are also very popular foreign large cap growth funds are much lower in terms of market share foreign growth funds are becoming more common for investors who want to take advantage of global growth these funds invest in international stocks posting strong revenue and earnings growth for international growth funds technology and consumer sectors are the most common large internet names such as tencent tctzf baidu bidu and alibaba baba can be found among the top ten holdings for many international growth funds largest growth fundone of the largest growth funds is the growth fund of america agthx from american funds this mutual fund has over 253 billion in assets under management aum as of march 2022 and the stock price is up 10 over the last year despite the market volatility the fund s average annual return has been 14 28 over the last ten years as of feb 28 2022 1the growth fund of america has tesla as its largest holding representing 7 1 of assets technology stocks represent the largest sector weighting at 34 9 consumer discretionary stocks follow closely behind with 24 3 of assets 1technology stocks are a major part of growth funds with high growth and high p e and p s ratios technology stocks fit the criteria perfectly for growth funds performance of growth fundsthe majority of the best performing large company stock funds over the last decade have been growth funds for example the morgan stanley multi cap growth a cpoax is the best performing large company stock fund over the last ten years with an annualized return of 23 3 currently its top three holdings include snowflake inc snow cloudflare inc net and the trade desk ttd 2