The Growth and Income Fund

The growth and income fund can be a good form of investment for those that wish to get the best of everything that the investment world has to offer. This fund is designed to provide you with capital growth as well as income. Here are the basics of the growth and income fund and a few things that you might want to consider about them.

The Growth and Income Fund

Most mutual funds do business by choosing one form of investment and sticking with it. For example, most equity funds will attempt to provide superior growth for their investors. By comparison, bond funds will attempt to provide a steady source of income for their clients. A growth and income fund attempts to successfully combine both investment strategies into one diversified portfolio. As an investor, this can provide you with a very attractive form of investment that can help you in two different ways.

Growth

The growth and income fund typically seeks to provide growth by investing in the stock market. They will usually go after stocks that are considered poised for consistent growth in the future. In order to achieve this, they will usually do quite a bit of financial analysis on the companies that they are considering purchasing. They will look for trends in the financial analysis that point to exceptional growth in the industry. Then they will purchase the stocks and attempt to provide growth for the investors.

These funds may also seek to provide growth by purchasing value stocks. This is done by trying to pick stocks that are undervalued in the market place. The company will then purchase them and seek to realize some nice growth when the stock price gets back to where it should be in the market place.

Income

This type of fund seeks to provide income in a few different ways. First of all, they might do this through purchasing stocks that issue a regular dividend. Many corporations will pay dividends to investors as a way to distribute the profits. Therefore, this can be a nice source of income for anyone that purchases the right stocks.

Another way that this type of fund provide income for the investors is to purchase bonds. These could be corporate bonds or government bonds in the portfolio. When the mutual fund purchases bonds, they are entitled to a regular interest payment from the bond issuer. These interest payments are then collected and distributed evenly to all of the shareholders in the fund.

Investment Considerations

As an investor, you should realize that this type of fund is for those that have a medium risk tolerance. Since part of the assets of the fund are invested in income producing securities, the overall appreciation of the fund will not be as great as a pure equity fund. Therefore, this type of investment can be very attractive during an uncertain market or for those that do not like the risk associated with equity funds.

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