Risks and opportunities of investing in Capital Appreciation Fund

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Certain mutual funds will try to improve the value of their assets by way of aggressive investment. They will try to make investments heavily in to stocks that have high prospects of growth. These funds, in turn are called as Capital Appreciation Fund.

These funds will have high prospects of growth, thus scope of increasing the amount of returns.

So if an investor is willing to take some risks in order to achieve higher returns, these types of funds are the perfect tool for them.

As they are focused on investing on stocks with high growth prospects, they tend to focus towards equity funds.

They may also try to compensate their heavy interest towards high growth predicted stocks by also acquiring some conservative stocks.

However, one flip side of these investments are the high risk that comes alongside them.

With the financial management looking for stocks with high growth prospects, there is a possibility that they may enticed to take up stocks which are highly vulnerable. This in turn could lead to loss for the investor.

So in other words, individuals who put money in them should be careful and aware about the risks they carry.

So, unless one is having financial stability and extra money along with a willingness to take risk they should avoid such funds.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow