Growth Fund is a type of mutual fund or investment fund that primarily invests in companies expected to grow at an above-average rate compared to others in the market. The main objective of a growth fund is capital appreciation rather than generating regular income through dividends or interest.

These funds typically focus on sectors such as technology, healthcare, and consumer goodsóindustries known for innovation and expansion potential. The companies included in a growth fund usually reinvest their earnings to finance future expansion, product development, or market penetration instead of distributing dividends to shareholders.

Investors choose growth funds when they aim for long-term wealth creation. However, these funds carry higher risk compared to income or balanced funds because the returns depend heavily on the companiesí performance and market conditions. During market downturns, the value of growth stocks may fluctuate more than other categories.

Key characteristics of growth funds include:

• Focus on high-growth companies: Target firms with strong revenue and earnings growth potential.
• Capital appreciation: Aim to increase the value of investment over time.
• Higher volatility: Returns can vary significantly in the short term.

In conclusion, a Growth Fund is ideal for investors with a long-term horizon and higher risk tolerance who seek to build wealth through capital gains. It forms a vital part of an equity-oriented portfolio strategy focused on future value rather than current income.