In the last video we discussed about value funds. We saw that the value funds are the funds which basically invest in value stocks. Now let's look at another type of fund known as a growth funds. The growth funds are the funds who will see that they invest primarily in growth stocks, as a formal definition, a growth fund with a mutual fund that is a diversified portfolio of stocks that has capital appreciation as its primary goal with little or no dividend payouts. The the portfolio may consist of companies with above average growth that reinvest their earnings into expansion after his acquisitions and our research and development. Now, look at the second sentence, the portfolio may consist of companies with above average growth.

So, the companies with above average growth are the companies which we consider as the growth stocks. Also Most importantly, these companies do not believe in giving in dividends in Steady reinvest their earnings into expansion acquisitions and research and development. So, this is typically the characteristics of growth stocks. So the growth funds primarily invest in growth stocks. Now as the companies they're invested in do not give too much dividend. So, the growth funds do not look to provide a dividend to its investors.

Instead, they look at capital appreciation. However, it should not be confused that growth funds also have options for growth option and dividend option. So, if the investor invest in a Growth Fund, which has a dividend top with the dividend option, then the investor will definitely get dividend. However, the dividend will not come to dividend provided by the stocks instead the dividend will come from the capital appreciation that has happened from the growth stocks. see an example of a growth fund. We take the fund call access focus 35 fund this fund is available in India.

If you see the holding pattern 97% of the holdings are in equities. So definitely This is an equity fund and thus it can be considered to be a growth fund. We will see whether it's really a growth fund or not. The AIM Under this particular fund is nearly 7000 crore rupees and it's in our category of multi cap that is it invest in large cap small cap and mid caps. From The Economic Times website I've collected the information regarding this access focus 25 fund, look at the top 10 holding companies of this particular fund. They are TCS Tata Consultancy Services, Bajaj finance kotak, Mahindra bank, HDFC Bank, multi Suzuki HDFC limited Bajaj finance, we delight industries avenues of a Martin supreme Industries Limited So, these are the top 10 companies where this fund is invested in the top 10 companies investment It comprises nearly 68% of the total funds value.

Now, we know that the growth stocks or the cap characteristics that they They have a high price to earnings ratio, they have a high price to book value ratio and they have a very low dividend yield. Now, if you notice that almost all the companies in fact 99% of the characteristics of these adopted holding companies are that have a growth stock, except for the dividend yield of TCS, all of the characteristics that are there in these companies are that of what a growth stock should have. So, this is definitely a very good investment plan, what the fund managers have chosen, because the objective is to invest in growth stocks and they have done so, later in this course, we will dig deeper into finding out which of these growth stocks are more beneficial and which are less. Thank you for listening. See you in the next lecture.