Growth Stock Mutual Funds

Growth stock mutual funds are one of the most popular types of mutual funds, with popularity right alongside money market funds.

They are portfolios of stocks that are managed by a fund management company, then sold as shares to investors. They have a lower risk than bond funds and close ended funds, but can be a lot of fun to watch as your money grows into a worthwhile investment.

There are several types of stock mutual funds, and different ways to classify them. First, all these funds fall into one of three categories. Growth funds invest in stocks that are believed to be the fastest growing stocks in the market. These are more risky and do not often pay dividends. Value funds are stock mutual funds that invest in stocks that appear to be out of favor. These funds require less money to invest, and their undervalued stocks tend to pay higher dividends.

Blend funds use a combination of growth and value funds. The second way that stock mutual funds are classified is by size. Large cap mutual funds invest in stocks of large companies, mid-cap mutual funds invest in large to mid size companies, and small cap mutual funds invest in the stocks of emerging companies.

One very popular choice is the index fund. These funds attempt to copy a particular stock index. They are mostly managed by computer, so they require lower investments and lower costs. Additionally, these types of stock mutual funds tend to out-perform more actively managed funds.

There are also other types of these funds. Global growth stock mutual funds invest in companies around the world, while foreign funds invest only in stocks of foreign companies. Country specific funds focus on stocks in a particular country or region, and emerging markets funds focus on stocks in developing countries. Emerging markets funds are the most risky of these choices.