 Personal Finance PowerPoint Presentation, Aggressive Growth Fund. Prepare to get financially fit by practicing personal finance. Most of this information comes from Investopedia, Aggressive Growth Fund, which you can find online. Take a look at the references, resources, continue your research from there. This by James Chen. Updated May 2nd, 2022. In prior presentations, we've been taking a look at investment goals, strategies, tools, keeping in mind the major categories of investments, that being the fixed income, typically the bonds, the equities, typically the common stock, also thinking about the tools we might be using, such as mutual funds, such as ETS, possibly helping us to diversify with less of an initial upfront investment as opposed to investing in individual stocks, in individual bonds, keeping that in mind. We're asking, what is an Aggressive Growth Fund? An Aggressive Growth Fund is a mutual fund that seeks capital gains by investing in the shares of growth company stocks. So we're talking about a mutual fund, that's gonna be us putting money into a fund that's gonna be managed by the fund manager, possibly allowing us that diversification by allowing the fund manager to invest in a broader array of funds with some restrictions, depending on the type of fund. In this case, they're gonna be investing in the growth company stocks. Investments held in these funds are companies that demonstrate high growth potential, but also carry greater risk. So we're always waiting those two things out, with the higher growth potential, often there's gonna be a higher rate of risk related to it. As such, Aggressive Growth Funds seek to provide above average market returns, however, their underlying investments are often volatile, causing high share price volatility. So when we're thinking of investing in an Aggressive Fund, we're doing so hoping that we get returns that are higher than the market average, meaning if you take a look at the whole market average, and oftentimes we think about these in terms of indexes. So how do we know what the market average is? Possibly we take some kind of index that represents the average market, meaning we take a sample of the companies that we think are representative of the market. We make an index for it, and then we take a sample of the companies that we think are in the Aggressive Growth Fund area, possibly making an index for that, and see if that index outperforms the average for the whole stock market as a whole. When you hear the idea of volatility, that means that you would expect the prices to be doing a lot more of this, at least in the short run. Peaks and troughs, hopefully it goes up over time, as opposed to the whole market as a whole, which you would expect less peaks and troughs, might not go up at the same rate, but you get the general idea. So if there's more volatility, you would expect more peaks and troughs, more down points and up points, so that's gonna cause you a little bit more of a headache, but you might be using this fund as part of a strategy for a long-term strategy as part of your portfolio, not the whole portfolio. So understanding Aggressive Growth Funds. Aggressive Growth Funds are identified in the market as offering above-average returns for investors willing to take some additional investment risk. They are expected to outperform standard growth funds by investing more heavily in companies. They identify with Aggressive Growth Prospects. So with the growth, we're expecting the growth to increase, which you would expect then the stock price to increase as opposed to, for example, investing in stocks where you're hoping you're gonna get the return in the form of a dividend. So you're usually thinking about these kinds of funds where you might not be getting the money back in the form of a dividend, possibly as much, because they're putting the dividends in the company to invest in things like assets to grow the stock or the company, which should be reflected in a growth or increase in the stock price. Aggressive Growth Funds invest in growth stocks with relatively more aggressive projections for revenue and earnings than the standard growth stock universe. Because aggressive growth stock funds are invested based on forward-looking assumptions and multiple growth phases, they can have higher comparable risk. So these funds typically do not fall into a standard category grouping reported by mutual fund research providers. They will typically be found in the Growth Fund category with fund names such as Aggressive Growth Fund, Capital Appreciation Fund, or Capital Gain Fund. Their main focus is to invest for superior capital gains. Since these funds typically are associated with high risk and high return, it is important for investors to closely examine risk matrix of the fund. Beta, Sharpe, Arratio, the standard deviation are three risk matrix that often reported by a fund company to help investors understand the fund's risks. Comparing the risk metrics to a benchmark is typically best when seeking to understand fund risks. So we can look at some of these benchmarks that are often given to us within the funds and they're gonna give us meaning, not usually in and of themselves, but as we compare them to other funds, and we look at the relative meaning. The Russell 3000 Growth Index is a good market index benchmark for investors when considering aggressive growth funds. Aggressive growth funds offer some of the highest return potential in the equity markets, also with some of the highest risks. Some aggressive growth funds may integrate alternative investing strategies that utilize derivatives investors should do thorough due diligence on these funds to understand their investments and investment strategies. Example of an aggressive growth fund, the Clare Bridge Aggressive Growth Funds with the ticker symbol S-H-R-A-X is one example of an aggressive growth fund available for both retail and institutional investors as of March, 2022. The fund holds $5.7 billion in assets and had a year to date return of negative 8.7% versus a return of 9.25% for its benchmark Russell 3000 Growth Index. The fund has a beta of 0.68, its Sharpe ratio is a negative 0.44 and its standard deviation is 14.07 indicating a higher than average level of risk due to its active management style. It has an expense ratio of 1.11%. So active management versus the index, remember, means that you got the active manager that's got more leeway which you're paying for so you would expect a higher expense ratio there. Conservative growth, in contrast to aggressive growth, conservative growth is an alternative investment strategy that aims to grow invested capital over the long term. So these funds typically target long term investors who place high importance on wealth preservation but would also like to take advantage of some of the market's high growth opportunities. Conservative growth funds usually allocate a high percentage of the fund to fixed income while investing the remaining allocation in growth or aggressive growth stocks. So note, when you look at the companies that you're often thinking about the cycle that's gonna look something like this, the company lasted all the way through the business cycle, you would think that you would have this growth component which would be somewhere around here which like if you bought Apple or Microsoft back when they were growing, they got that expansive growth time. You're not gonna get the big dividends there but you're gonna expect that they're gonna take the money they earned, they're gonna put it back in the company, possibly be taking out loans and whatnot to get the money to build facilities and whatnot so they can grow the company. So that should be reflected in the stock price. And then when you get up to here, an established company like Microsoft or Apple at this point in time or like a utility company is a classic example, then the infrastructure basically being built, you would accept them to be marching along pretty steadily but not have that big swing or big growth up. Obviously there's a lot of risk in this area as well when companies are growing because they're competing with other companies and so that's where the risk is going to lie. Now, typically when we are getting older or closer to retirement in our investment strategy, we often are looking for less growth as we hit that target point. So that means we might be up here on the companies and looking for more dividends and so on at that point in time. So you wanna keep in mind the time horizon you have in terms of when you're gonna be investing in more of invested growth funds as part of your portfolio versus more conservative kind of investments with more established type of companies. Typically the growth funds would be something that you might have more earlier on oftentimes within the time horizon of the portfolio as a whole.