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Aggressive Growth Mutual Funds to Consider for High Returns

Hetal Bansal
Written By Hetal Bansal - May 09, 2023
Aggressive Growth Mutual Funds to Consider for High Returns

Aggressive growth mutual funds are a type of investment vehicle that seeks to achieve high returns by investing in stocks of rapidly growing companies. These funds typically focus on companies in emerging markets, technology, healthcare, and other high-growth sectors. While aggressive growth mutual funds can offer the potential for high returns, they are also associated with higher levels of risk, making them a more suitable investment option for those with a higher risk tolerance.

 

Aggressive Growth Mutual Funds to Consider for High Returns

 

Coins In a Glass jar, written High risk high return

 

  • T. Rowe Price Global Technology Fund (PRGTX): This fund focuses on technology companies around the world and has a strong track record of high returns. With a portfolio that includes companies such as Apple, Amazon, and Alphabet, this fund has delivered an average annual return of over 22% over the past five years.
  • Vanguard Information Technology Index Fund (VITAX): This fund tracks the performance of the technology sector and has a low expense ratio of just 0.10%. With a portfolio that includes companies such as Microsoft, Facebook, and Visa, this fund has delivered an average annual return of over 28% over the past five years.
  • Fidelity Select Health Care Portfolio (FSPHX): This fund focuses on companies in the healthcare sector, including pharmaceuticals, biotechnology, and medical equipment. With a portfolio that includes companies such as Johnson & Johnson, Pfizer, and UnitedHealth Group, this fund has delivered an average annual return of over 20% over the past five years.
  • Vanguard Emerging Markets Stock Index Fund (VEMAX): This fund focuses on companies in emerging markets such as China, Brazil, and India. With a low expense ratio of just 0.12%, this fund has delivered an average annual return of over 11% over the past five years.
  • T. Rowe Price New Horizons Fund (PRNHX): This fund focuses on small and mid-cap companies that are in the early stages of growth. With a portfolio that includes companies such as Square, Tesla, and Zoom Video Communications, this fund has delivered an average annual return of over 25% over the past five years.
  • Fidelity Select Software & IT Services Portfolio (FSCSX): This fund focuses on companies in the software and IT services sectors. With a portfolio that includes companies such as Adobe, Salesforce, and ServiceNow, this fund has delivered an average annual return of over 30% over the past five years.
  • T. Rowe Price Health Sciences Fund (PRHSX): This fund focuses on companies in the healthcare sector, including pharmaceuticals, biotechnology, and medical equipment. With a portfolio that includes companies such as Amgen, Regeneron Pharmaceuticals, and Thermo Fisher Scientific, this fund has delivered an average annual return of over 20% over the past five years.
  • American Century Emerging Markets Fund (TWEIX): This fund focuses on companies in emerging markets such as China, India, and Brazil. With a portfolio that includes companies such as Alibaba Group, Tencent Holdings, and HDFC Bank, this fund has delivered an average annual return of over 12% over the past five years.
  • Fidelity Contrafund (FCNTX): This fund focuses on large-cap companies that have a history of strong growth. With a portfolio that includes companies such as Amazon, Facebook, and Alphabet, this fund has delivered an average annual return of over 18% over the past five years.
  • Artisan Global Opportunities Fund (ARTRX): This fund focuses on companies around the world that have a history of strong growth. With a portfolio that includes companies such as Adobe, Mastercard, and PayPal, this fund has delivered an average annual return of over 22% over the past five years.

 

The Pros and Cons of Investing in Aggressive Growth Mutual Funds

 

Pros and Cons written on a notepad

 

Pros

  • High potential returns: Aggressive growth mutual funds have the potential to offer high returns that can outpace the market. These funds invest in companies that have a high growth potential and are likely to see significant capital appreciation over time.
  • Diversification: Investing in aggressive growth mutual funds provides diversification benefits as the fund is typically invested in a diversified portfolio of companies. This can help reduce the risk associated with investing in individual stocks.
  • Professional management: Aggressive growth mutual funds are managed by professional fund managers who have expertise in identifying and investing in companies with high growth potential. This can be a valuable resource for investors who may not have the time or expertise to research and analyze individual companies.
  • Liquidity: Aggressive growth mutual funds are highly liquid, which means that investors can easily buy and sell shares in the fund. This provides investors with flexibility and the ability to quickly adjust their investment portfolio if needed.

 

Cons

  • High risk: Aggressive growth mutual funds are inherently risky as they invest in companies with high growth potential, but also have high volatility. These funds are susceptible to market downturns and economic cycles, which can lead to significant losses.
  • Volatility: Aggressive growth mutual funds are highly volatile and can experience rapid fluctuations in value. This can be challenging for investors who may be uncomfortable with the level of risk associated with these funds.
  • Management fees: Aggressive growth mutual funds are actively managed, which means that they typically have higher management fees compared to passive index funds. These fees can eat into investor returns over time.
  • Market timing: Investing in aggressive growth mutual funds requires good market timing. These funds are designed to capitalize on market trends and shifts, so investors need to be able to identify when to invest and when to pull back.
  • Limited track record: Aggressive growth mutual funds often invest in newer or smaller companies that may not have an established track record. This can make it difficult for investors to assess the long-term potential of these companies and the fund itself.

 

How to Evaluate Aggressive Growth Mutual Funds Before Investing

 

man planning long-term investments on mutual funds

 

  • Fund performance: When evaluating an aggressive growth mutual fund, the first thing to consider is its past performance. This includes both short-term and long-term performance. Investors should look for funds that have consistently outperformed their benchmarks over the long term, ideally for at least five years.
  • Investment philosophy: Aggressive growth mutual funds are typically managed by active fund managers who have a specific investment philosophy. It's essential to understand the fund manager's investment approach and philosophy to determine whether it aligns with your investment goals and risk tolerance.
  • Fund expenses: The fees associated with an aggressive growth mutual fund can impact investment returns significantly. Investors should evaluate the fund's expense ratio, which includes management fees, administrative fees, and other expenses. Ideally, investors should look for funds with low expense ratios.
  • Portfolio diversification: An aggressive growth mutual fund should have a well-diversified portfolio to reduce risks associated with investing in individual stocks. A well-diversified portfolio can help mitigate risks and provide stable returns over the long term.
  • Investment restrictions: Some aggressive growth mutual funds have investment restrictions that limit their ability to invest in certain types of securities or industries. Investors should evaluate these restrictions to ensure that they align with their investment objectives and risk tolerance.
  • Fund size: The size of the fund can impact its performance and liquidity. A fund that is too small may not have the resources to invest in a diversified portfolio, while a fund that is too large may struggle to find suitable investment opportunities. Ideally, investors should look for funds that have a sizeable asset base but are not too large that it becomes unwieldy.
  • Management team: The management team of an aggressive growth mutual fund is critical in determining the fund's performance. Investors should evaluate the fund manager's experience, qualifications, and track record to determine whether they have the expertise to manage an aggressive growth mutual fund successfully.
  • Risk management: Aggressive growth mutual funds come with high risks, and it's essential to evaluate the fund's risk management strategies. Investors should evaluate the fund's risk management policies, including the use of stop-loss orders, asset allocation, and diversification.
  • Historical volatility: Aggressive growth mutual funds tend to have high volatility, making it essential to evaluate the fund's historical volatility. Investors should look for funds that have managed volatility effectively over the long term.
  • Market trends: Finally, investors should evaluate market trends and conditions to determine whether an aggressive growth mutual fund is suitable for their investment objectives. These funds tend to perform best during periods of economic growth and expansion, while they may struggle during economic downturns.

 

Conclusion

 

In conclusion, aggressive growth mutual funds can be a viable investment option for those with a high-risk tolerance and a desire for potentially high returns. However, as with any investment, it is important to carefully consider the pros and cons before investing in these types of funds. While the potential for high returns can be attractive, it is important to remember that aggressive growth mutual funds are also associated with higher levels of risk. As with any investment decision, it is important to do your research, consult with a financial advisor, and make an informed decision based on your individual goals and risk tolerance.

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These companies have raised their dividends for at least 25 consecutive years.Examples include:3MColgate-PalmoliveWhen a company raises its dividend each year, your income rises without buying more shares.Reinvesting Dividends For CompoundingLet us explain something powerful that many beginners overlook.Dividends can be reinvested automatically through DRIP programs, which stand for Dividend Reinvestment Plans.Brokerages like Fidelity Investments or Charles Schwab allow investors to reinvest dividends into additional shares.Over time, this creates compounding.Don't Miss: How to invest in AI stocks for long-term growth in 2026Creating Passive Income From StocksOne reason dividend strategies appeal to beginners is the potential for passive income from stocks.But passive does not mean careless. A well-built portfolio still needs a thoughtful structure.Diversifying Your Dividend PortfolioDividend portfolio diversification decreases risk. The reduction of dividends by one company does not necessarily mean that others will stop paying.An example with a diversified portfolio of dividends could be:Consumer goods companiesUtility companiesHealthcare firmsEnergy companiesFinancial institutionsDiversity of investments reduces the risk associated with income.Using Dividend ETFs And ToolsOthers, like dividend-centered ETFs, have been found to be favored by some investors who seek the easier method.Popular Dividend ETFs are:Vanguard Dividend Appreciation ETFSchwab U.S. Dividend Equity ETFThese funds are diversified in terms of holding collections of dividend-paying firms.They provide a very easy delivery of a strategy for generating dividends without the need to research dozens of individual stocks.Long-Term Dividend Investing HabitsLong-term dividend investing rewards patience more than brilliance. That may sound boring, but it's true.Successful investors often follow simple habits for years.Patience And ConsistencyDividend portfolios grow slowly at first. Then something interesting happens.The income starts stacking up.Investors who contribute regularly and reinvest dividends often see income increase each year.Many long-term investors track a simple goal:Income growth, not just portfolio value.Avoiding Common Beginner MistakesNew investors sometimes make predictable mistakes. Let's talk about a few.Chasing extremely high dividend yieldsIgnoring company fundamentalsSelling stocks too quicklyLack of diversificationMarkets fluctuate. Dividend stocks are no exception. Prices may fall during economic downturns, even when companies remain healthy.Also Read: Reverse Stock Split Explained: Meaning, Purpose & ImpactConclusionDividend investing is not present in the headlines of the financial front, yet it is one of the surest approaches to increasing wealth.The intelligent dividend strategy will be a combination of consistent companies, reinvestment, and long-term patience. In the long run, a developed dividend income plan can provide a consistent passive source of income using stocks and will allow investments to increase.The most important thoughts are the basic ones, though, for beginners. Focus on strong companies. Search for sustainable dividends. Reinvest whenever possible. And stay consistent.FAQsWhat Is Dividend Investing?Dividend investing refers to the purchase of stocks which consistently distribute shareholders a share of the company income. The shareholders still make profits on the stock.How Much Money Do I Need To Start Dividend Investing?It is possible to begin with fractional shares that are sold by brokerages. Even a couple of hundred dollars will start earning dividends.Are Dividend Stocks Good For Beginners?It is true that dividend stocks attract many novices due to the regular payout and the investment being less risky than growth stocks.Can Dividend Stocks Create Passive Income?Yes. In the long run, diversification of a portfolio may also yield passive income in the form of stocks in terms of periodic transactions in the form of dividends, particularly through reinvestment of dividends.