 Personal Finance Powerpoint Presentation, Growth Fund. Prepare to get financially fit by practicing personal finance. Most of this information comes from Investopedia Growth Fund, which you can find online. Take a look at the references, resources, continue your research from there. This by James Chen, updated April 27, 2022. In prior presentations, we've been looking at investment goals, strategies, tools, keeping in mind the two major categories of investment that typically being the fixed income, usually the bonds and the equities, typically the common stock. Also, keeping in mind tools we might be using, such as mutual funds, such as ETFs, possibly helping us to diversify with lesser of an initial investment than if we were to invest in individual stocks or individual bonds. So now we're thinking about what is a growth fund? A growth fund is a diversified portfolio of stocks that has capital appreciation as its primary goal with little or no dividend payout. So when we're thinking about investing then, we can think about a company in terms of its investment cycle and it might look something like this. We're thinking about the types of company that are in this growth spurt basically here. You can look at say Microsoft back when it was growth growing or an Apple back when it's growing. We want to get that explosive growth kind of area as opposed to those companies that are more mature that are up here possibly not having as much potential for explosive growth because they're already growing but they're still marching along like a Microsoft now or like say a utility company or something like that. When you're looking at this area within the growth cycle, we would expect these companies then not to be giving us dividends. There's two ways that we're going to get paid generally when we are investing. We would like to have possibly dividends meaning they're going to earn money and give it back to us in the form of a dividend or they're going to take that money, they're going to put it back into the business. Why? Because they're buying the infrastructure. They're putting their money into the assets. They're investing in what they need for future potential growth like plant property equipment. And if they do that correctly, do that properly, their potential for future income will go up and we would expect that to be reflected in the stock price. So that's the other way that we could see growth happening instead of them giving us the money. They invested and they generate a return higher than we could generate which should be reflected in the stock price which we can then sell if we so choose at some future point. Okay. The portfolio mainly consists of companies with above average growth that reinvest their earnings into expansion, acquisition or research and development, the good old R&D. Most growth funds offer higher potential capital appreciation but usually at above average risks. So if we look at this growth cycle, we would expect these more established companies over here to be marching along because they're well established. The growth stocks then have the potential for the explosive growth but more risk involved with them as well. So how a growth fund works. The high risk, high reward mantra of growth funds can make them ideal for those not retiring any time soon. When we're thinking about our investment strategy as individual investors oftentimes we're thinking about retirement but whatever the strategy is, whatever the goal is if we have a longer type of time horizon before we hit that end goal that's when we're more likely to want some of our portfolio allocated to more highly risky kind of areas when we get close to that goal possibly less allocated to more high risk because we don't want to be caught on the downturn right before we need the money for example. So typically investors need a tolerance for risk and a holding period with a time horizon of five to ten years we're saying. So that's what they're saying here. Growth fund holdings often have high priced earnings that's going to be the 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 funds. Growth funds along with value funds and blend funds are one of the main types of mutual funds exchange traded funds those being the 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. So when we're investing in mutual funds note that we still have a lot of choices in terms of how we're going to invest. Do we want to invest in one mutual fund that tries to blanket the entire market and have a diversified portfolio in that way or do we want to try to invest in multiple mutual funds that are in separate categories and so we have different categories like small cap, mid cap, large cap and we can have categories in terms of growth funds for example as well. So we talked about caps we might talk about caps more in the future that's going to be related to kind of like the size of the company. So in that when you're thinking about your investment strategy you want to be thinking how much control do I want to have over this? So obviously we don't have as much control as individual stocks. Most investors are going to be using mutual funds. Do you want to try to have like very few mutual funds that are going to have an average investment blanketing over a large swath of different stocks or would you like to have more control by possibly investing say in different categories of mutual funds so that you can adjust your holdings at least a little bit more within those particular categories of funds. So 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. So note then again you might start to say okay well if I'm going to invest in like the different cap sizes like large cap versus mid cap and small cap then maybe I try to get like a large blend fund that's going to invest with investing value and growth right? So now you're getting some diversification in the one fund between that is now in the category of the large blend fund. So then you got the four large cap growth funds are much lower in terms of market share. So we have 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 that's the TCTZF and Baidu that's the BIDU and Alibaba that's the BABA can be found among the top ten holdings for many international growth funds. Largest growth fund one of the largest growth funds in the growth fund of America so is the growth fund of America. That's the ticker symbol AGTHX from American funds. This mutual fund has over $253 billion in assets under management. That's the AUM as of March 2022 and the stock price is up 10% over the last year despite the market volatility. The funds average annual return has been 14.28% over the last 10 years as of February 28th 2022. The growth fund of America has Tesla as its largest holding representing 7.1% of assets. Technology stocks represent the largest sector waiting at 34.9%. Consumer discretionary stocks follow closely behind with 24.3% of assets. Performance of growth funds. The 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 10 years with an annual return of 23.3%. Currently, its top three holdings include Snowflake Incorporated, SNOW, Cloudflare Incorporated in ET and the Trade Desk. That's the TTD.