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Finance: What is an Aggressive Growth Fund, A GO GO Fund, A High Octane Fund? 61 Views
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What is an Aggressive Growth Fund, A GO GO Fund, A High Octane Fund? An aggressive growth fund (also referred to as GO GO or high octane) is a type of mutual fund that invests in aggressive growth stocks. These stocks are expected to see substantial growth, but are really volatile and risky. They allow for a chance at big returns without taking as much risk as investing in individual growth stocks because of differentiation among multiple stocks.
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Transcript
- 00:00
Finance a la shmoop what is an aggressive growth fund a go-go fund
- 00:06
and/or a high-octane fund ah yes investment funds have oh so many [People put sticker notes on investment fund file]
- 00:13
labels there are income funds comprised mostly of bonds usually in high yielding
- 00:19
dividend kind of stocks and you can buy them managed like in the form of a
- 00:23
mutual fund or unmanaged in the form of an index fund there are growth and
Full Transcript
- 00:28
income funds usually a combo of stocks and bonds so in theory the funds value [Value tree appears]
- 00:33
grows but it also throws off a lot of cash along the way then there are just
- 00:36
growth funds notice the word aggressive isn't in there on the volatility
- 00:41
spectrum well they live out here right-hand side of the bell curve when [Growth funds on right side of a bell curve]
- 00:45
times are good they're very good when times are bad they're also not good in a
- 00:49
good year a growth fund can be up 15 20 % maybe more in a bad year well down
- 00:55
the same so now tack on the word aggressive in front of [Man puts aggressive label on investment fund file]
- 00:59
that fund flavor and you can maybe double the volatility for the good and
- 01:04
the bad and the high-octane fund is you know an allegory for gasoline on a fire [Man with gasoline tank by a fire]
- 01:10
it can really roast you nicely and warmly in the cold night or it can well [Fire creates explosion and man runs away]
- 01:16
do that so what do aggressive growth funds like these invest in you know go
- 01:20
go aggressive let's go not just once but twice
- 01:23
well they invest in typically risky volatile stocks a whole lot of
- 01:27
technology stocks that are unproven small tech companies are regular
- 01:31
favorite of this class is this little company the next Amazon in 20 years or [Woman sat at a computer desk]
- 01:36
is it Pieceocrap.com well over long periods of time and
- 01:40
inside of bull market era like decades where the market generally goes
- 01:44
up like it has been since 2009 while aggressive growth funds might compound
- 01:49
at 11 12 13 14 15% something like that whereas a bit more conservative
- 01:54
just growth funds might only compound at 8 9 or 10% but those two
- 01:58
percentage points of compounding actually matter a lot over the long-run
- 02:02
remember that rule of 72 well take the compound interest and divide it into 72 [Rule of 72 on a 100 dollar bill]
- 02:06
and that's how long it takes to double well it applies here as well the
- 02:10
aggressive, in aggressive growth fund should in theory anyway add two percent
- 02:15
in returns or reward in good times thanks in large part to the added risk
- 02:19
taken in that category so 36 years pass and that aggressive growth fund all else
- 02:25
being equal should be double of what a normal growth fund should be but with a [Aggressive and Growth funds marked on a graph]
- 02:29
whole lot more volatility see that 2% divided into our little rule of 72 thing
- 02:34
there well that's 36 years to double with that extra 2% so if you can handle
- 02:39
the volatile, violent, flame field rocky mountain style peaks and volatility [Lava spews out of volcano]
- 02:45
valleys of depression canyon and kill me now cave well then you'll love the view
- 02:50
from Everest Lookout and punitive taxes peak if you're an investor like the
- 02:56
wealthy and aggressive go go high octane funds yeah go go for it [Woman skiing on mountain and falls off the edge]
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