When you are looking to invest in a mutual fund that focuses on growth, you are looking for growth stock mutual funds. This type of investment is focused on growth of the assets as opposed to an income fund where the focus is on providing a source of income through stock dividends. The profits are re-invested to grow the assets of the fund, so do not expect income from this type of investment.

The investment manager will look for stocks in companies that have a large potential for growth. During hard economic times, some stocks may be bargain priced temporarily due to the state of the economy. Such investing is highly speculative and carries with it a larger degree of risk. Make sure that you are comfortable with this risk before you invest. Fund managers also look for companies that are involved in technologies that are immature and poised for explosive growth. Again, this is highly speculative and carries a lot of risk, but the upside is the potential for very large returns. You should also keep in mind that your money may be tied up for a considerable length of time due to the fact that many of these funds are geared towards long term growth as opposed to fast profit taking.

Funds can also be grouped according to the size of company that they specialize in. The three types are small cap funds specializing in small companies, mid cap funds specializing in mid-sized companies and large cap funds that only look at very large corporations. The idea here is that smaller companies are capable of large growth simply due to the size and nature of a smaller business. Smaller businesses can react faster to changes in technology or marketplace. Since smaller companies also have fewer resources, they are considered higher risk because they can more easily go under in bad economic times.

The opposite holds true for larger businesses with regards to risk assessment. Larger businesses are considered to be safer investments because they have assets that can help them survive bad economic times or just bad management decisions. As such, they typically carry a lower risk, but the downside is that they also have a lower growth potential than a smaller company.

Some funds use a mix of different business sizes, small, medium, and large corporations in order to balance the potential for growth with the amount of risk involved. Another risk mitigating strategy is investing in a larger number of companies to spread the risk more widely. The downside is more research and management fees which may impact the fund's profit ratio.

As with all types of investments, you need to assess your own financial goals. If you are an investor that can tolerate a lot of risk, then you will look to invest in a more aggressive growth fund. If you don't have money to speculate with, then you will look for a fund with more modest growth objectives, a more conservative fund that will look to minimize the potential for losses.

To learn more consult with the experts at Paradigm Capital Management Inc a privately held trusted leader in small cap investing in Albany, NY.
The Paradigm Capital Management’s Funds family of no-load mutual funds makes the firm’s small-cap and SMid-cap strategies available to fee-based financial advisors and retirement professionals. Paradigm Funds are widely available on more than 50 no-load platforms

To learn more, please visit here: http://www.paradigmcapital.com/about/who-we-are/