Aggressive Growth Fund is a type of mutual fund which is not risk-averse in its selection of investments and aims to achieve the highest capital gains. As an investor, an aggressive growth fund is best suited for those who are prepared to take on high-risk. The potential in such a high-risk fund lies in the fact that along with having high growth potential, they are usually coupled with a lot of share price volatility. The Stock market and aggressive growth funds usually have a very large positive correlation Aggressive growth funds have large betas. Thus this means that during economic downturns very bad results are usually produced. It also means that during economic upswings very good results are produced. Other common terms for Aggressive Growth Fund is maximum capital gains fund and capital appreciation fund.
An aggressive growth fund may purchase a company's initial public offerings (IPOs) of stock and then turn around to sell it off to produce big profits. Aggressive growth funds may also be invested in derivatives, such as options, so that gains can be increased. This growth-oriented version of the general growth investment strategy can be relatively risky but have a greater potential for greater returns.
How will you know if your fund is Aggressive Growth?
Look out for the terms strategic equity, capital opportunity, capital appreciation or aggressive growth. Many aggressive growth stock mutual funds will have any of these terms within its names. This is however a general rule and does not necessarily have to hold true in all cases.
Look into the best mutual fund research sites for a more sure way to find out whether a fund is an aggressive growth fund. You must look under Fund Objective for the term aggressive growth. A mutual fund that has the words aggressive growth in its name can be considered as a growth fund. The Objective is an investment strategy and category is a label for reference which means that there is a difference in meaning of the terms. Further, this means that in case you have a growth fund in your portfolio, an aggressive growth fund may not be needed as an addition.
Another way to make certain that a growth fund is after all an aggressive growth fund is to look at its beta. Beta measures a fund's movement, comparing it to the overall market. For instance, if a beta of 1.00 is given by the market, an aggressive growth fund will be having a beta which is considerably higher than 1.00. This could be 1.10 or even more.
Common features of aggressive growth funds
Aggressive growth funds provide some of the highest returns in equity markets. They also come with high risks. There are a few aggressive growth funds that come with unique investment strategies that intend to offer market returns higher than average. However, the latent investments of such funds will typically be unpredictable in nature. They are impulsive, and hence, they are pretty risky.
Who can invest in an aggressive growth fund?
Any individual who is looking for returns higher than average can invest in aggressive growth funds. These funds usually perform better than regular growth funds. This is because they invest in companies that can relate to vigorous or competitive growth projections and strategies. These funds invest in stocks that have dynamic goals towards achieving high revenues when compared to regular growth stocks. They should not be taken by risk-averse investors.
Aggressive growth fund managers typically look for a rise in the value of portfolios through capital appreciation.
Why are aggressive growth funds associated with high risk?
When you choose an aggressive growth fund, money will be invested as per different financial assumptions and calculations made for the future. These assumptions are made for various stages of financial growth. Hence, they come with higher levels of risk when compared to other types of normal growth funds. The primary goal of aggressive growth funds is to invest money to earn grand capital gains.
Due to the high-risk level related to these funds, one should monitor the risk metrics of such funds on a regular basis. An investor can learn about the 3 main risk metrics related to mutual funds known as standard deviation, Sharpe Ratio, and Beta. With the help of these metrics, an investor can get a clear understanding of the various risks of the fund.
What is the significance of investing in aggressive growth funds?
These funds invest in equity securities and other stock that have the ability to generate excellent returns. Hence, most of these stocks invested in such funds are usually bought very quickly and even sold quickly for making profits. They can then be reinvested in the same fund or given as distribution payments to different investors. Since they have the ability to generate superb returns, they should ideally be a part of your diversified investment portfolio at least in a small portion.
What you should be aware of regarding aggressive growth funds
Aggressive growth funds are schemes that offer high returns and come with high risks. Hence, they can either very well or very badly. This is because of the high price instability. In a bull market, aggressive growth funds attain great gains, whereas in a bear market, these funds go through heavy losses.
Table showing the top aggressive growth funds in India
|Name of fund||Expense ratio (in %)||Net assets (in Rs.) (in crore)||1-year rank||Market cap (in crore)||1-year return||Net assets (in crore)||Turnover|
|Canara Robeco Emerging Equities Fund - Regular Plan||2.25||3,559||45/83||27,965.65||13.24||3,559||50.00|
|Aditya Birla Sun Life Pure Value Fund||2.34||3,372||29/83||9,017.73||15.35||3,372||264.00|
|HDFC Mid-Cap Opportunities Fund||2.13||19,339||39/83||11,538.76||13.88||19,339||58.25|
|Edelweiss Mid Cap Fund - Regular Plan||2.34||669||7/83||11,257.96||22.35||669||298.00|
|L&T Emerging Businesses Fund||2.08||5,001||7/22||5,494.63||24.13||5,001||50.67|
|Mirae Asset Emerging Bluechip Fund - Regular Plan||2.38||5,006||50/83||25,787.10||12.54||5,006||72.00|
|Reliance Small Cap Fund||2.00||6,545||2.00||4,056.29||23.50||6,545||131.00|
|Principal Emerging Bluechip Fund||2.34||1,657||13/83||19,619.09||17.45||1,657||70.00|
|SBI Small & Midcap Fund||2.32||771||2/22||2,453.05||37.08||771||80.00|
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