Aggressive Growth Mutual Funds to Consider for High Returns

By Hetal Bansal

plant in a jar full of coins showing Increase of money

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.