WHAT SECURITIES DO GROWTH & INCOME FUNDS INVEST
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Most of the stocks that growth and income funds choose are those
of blue chip companies.
chips are the established, high-earning fixtures of the American economy,
such as IBM and Merck.
Growth and income funds prefer growth-oriented blue chips.
However, besides growth, these companies also provide the funds with steady
Growth and income funds may also buy some bonds and cash
equivalent investments. These investments are a small part of a growth and
income fund's portfolio. In fact, a fund may have up to 90 percent of its
capital in stocks. The majority of the income comes from its stocks rather than
Growth and income fund managers are looking for a special kind of
blue chip stock?one that will outperform the market average.
may also choose some stocks that are undervalued. These stocks are called
Managers hope undervalued stocks are due for a growth spurt in
the near future. This can provide the fund with some of the growth it seeks.
Let's summarize what we've learned about growth and income