Growth and income funds and ETFs are popular with investors who have a moderate appetite for risk. If you consider yourself to fit that mold, mutual funds may be for you.
The funds seek a total return for investors through capital returns and current income. They can, be described as a type of blended fund that invests in growth and value stocks.
What is a growth and income fund? It is a mutual fund or ETF that prioritizes the dual strategy of achieving capital appreciation and current income such as dividends. Therefore, investments are likely in stocks, bonds, real estate investment trusts (REITs) and other securities.
Quick Look at the Best Growth and Income Funds and ETFs:
- Fidelity Large Cap Growth Index Fund
- AB Large Cap Growth Fund
- VanEck Vectors Low Carbon Energy ETF
- Manor Investment Funds Growth Fund
- Invesco KBW Property & Casualty Insurance ETF
The Best Growth and Income Funds and ETFs
You have a wide range of choices when investing in mutual funds but not all will be perfectly suited to every investor. The list below shows the best growth and income mutual funds over the past few years.
#1 Fidelity Large Cap Growth Index Fund
This Fidelity Large Cap Growth Index Fund mutual fund, which trades under the symbol FSPGX, seeks to provide results corresponding to the total return of large-cap U.S. stocks. In addition, the index aims to correspond with the Russell 1000 Index as it measures the performance of high-value U.S. stocks.
All investments come a possibility of risk. Growth stocks can be the most volatile and perform differently from the rest of the market. So, despite the potential for large gains and considerable growth in this index, expect volatility.
#2 AB Large Cap Growth Fund
The AB Large Cap Growth Fund mutual fund, which trades under the symbol APGAX, invests at least 80% of its net assets in large-capitalization companies. The investments look for long-term capital growth and hold total net assets of $16.07 billion.
The company holds stocks such as Microsoft Corp. (NASDAQ: MFST), Alphabet Inc. (NASDAQ: GOOGL), Amazon.com Inc. (NASDAQ: AMZN) and Visa Inc. (NYSE: V). In addition, the predominant sector of investment is in technology and healthcare. Furthermore, it may invest in ETFs to diversify its portfolio through investments in securities.
#3 VanEck Vectors Low Carbon Energy ETF
Renewable energy has been a significant talking point, and if it can be achieved on a global scale, the benefits will be vast. Prevention of global warming, becoming less dependent on fossil fuels and creating jobs are just a few benefits.
This leads to VanEck Vectors Low Carbon Energy ETF (NYSEARCA: SMOG), which prioritizes businesses with alternative energy and renewable producers. Its top sectors include utilities (40.05%) and consumer cyclical (25.82%).
Tesla Inc. (NASDAQ: TSLA), Nio Inc. (NYSE: NIO) and Xpeng Inc. (NYSE: XPEV) are some of the biggest names in the fund as consumers slowly transition to electric vehicles. And with alternative energy sources growing in demand, this fund’s growth may be significant.
#4 Manor Investment Funds Growth Fund
The Manor Investment Funds Growth Fund mutual fund, which trades under the symbol MNRGX, prioritizes investments in large corporations with an average market capitalization of $7.5 billion or more. Typical investments include companies that are priced attractively with the potential for considerable growth.
The fund tends to hold investments for three to five years but may choose to sell securities within 12 months if circumstances change.
The fund holds stocks such as Apple Inc. (NSADAQ: AAPL), Amazon and Eli Lilly and Co. (NYSE: LLY), and its most significant sector is technology.
#5 Invesco KBW Property & Casualty Insurance ETF
The Invesco KBW Property & Casualty Insurance ETF (NASDAQ: KBWP) offers investors the potential to expand into property and casualty insurance companies. The fund opts for stocks in this initial sector and tracks the KBW NASDAQ Property & Casualty Index.
The fund is dominated by some of the top firms in the insurance sector. Insurance giants such as Chubb (NYSE: CB), Progressive Corp. (NYSE: PGR) and American International Group Inc. (NYSE: AIG) make up the majority of its total assets.
The fund offers a dividend yield of 2.8% and has seen stock buybacks and capital returns in the past. As a result, the fund provides attractive qualities for investors seeking growth and income.
| Ticker | Company | ±% | Price | Invest | ||
|---|---|---|---|---|---|---|
| KBWP | Invesco KBW Property & Casualty Insurance ETF | 1.56% | $123.13 | Buy stock | ||
| PGR | Progressive | 1.99% | $262.14 | Buy stock | ||
| CB | Chubb | 0.78% | $285.05 | Buy stock | ||
| AIG | American Intl Gr | 1.64% | $75.89 | Buy stock | ||
What are Growth and Income Mutual Funds?
Growth and income funds seek to achieve growth in their returns through capital gains and current income. This goal can be achieved through capital appreciation in the fund and earning income.
For growth and income mutual funds, returns may not be as rapid as pure growth funds but the passive income earned aims to achieve a balance. Furthermore, growth funds may struggle during an unstable economy, although growth and income mutual funds could benefit.
The keyword to emphasize is risk. Growth funds may not be ideal as the increased amount of risk may not fit the parameters of every investor.
However, if an investor is looking for a more stable investment portfolio, growth and income mutual funds may be the way to go.
How do Mutual Funds Work?
Mutual funds work to offer diversification in an investor's portfolio. But how do mutual funds achieve this?
Mutual funds comprise several investors who pool money. The capital is used to purchase stocks, bonds and other securities. That diversified array of assets helps to lower risk.
You can choose from numerous mutual funds in multiple markets. However, the main goal for the majority is to attain the highest return possible.
Who Benefits From Growth and Income Funds?
Growth and income mutual funds differ, growth and earnings are the ultimate goals. Who benefits from mutual funds?
Investors: Individual investors can benefit from growth and mutual funds. Every investor's hope is for significant returns, which is what mutual funds aim to achieve. These funds are shaped around achieving immense growth.
Funds and brokers: Growth and income mutual funds are a popular investment choice, but that does not mean it comes without fees or benefits to the broker/investment manager. The management arm of the fund makes money by charging investors a management fee or a sales commission. Fees vary significantly.
Compare Online Brokers
Comparing growth and income funds can help you settle on an ideal choice and hopefully the best investment opportunity. However, it is also important to find the best broker to use. Below is a comparison of some of the best online brokers that offer mutual funds.
- Best For:Active and Global TradersVIEW PROS & CONS:Securely through Interactive Brokers’ website
Frequently Asked Questions
How are mutual funds in the category of growth and income investments?
A growth and income fund is a class of mutual funds that prioritizes two key factors. They aim for a dual strategy of achieving growth and income through investing in securities and other stocks.
What is the difference between a growth fund and a growth and income fund?
A growth investment aims to increase the original sum of your investment as much as possible. Income means that you recieve a steady rate of earnings over time, such as a dividend. Therefore, growth and income funds focus on achieving both outcomes whereas growth funds focuse solely on capital appreciation.
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