Bob Brinker's Marketimer

  Tuesday November 21, 2017

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WHAT SECURITIES DO GROWTH & INCOME FUNDS INVEST IN?
Learn even more about this topic with the Encyclopedia of Personal Finance™

Most of the stocks that growth and income funds choose are those of blue chip companies.

Blue 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 income.

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 its bonds.

Growth and income fund managers are looking for a special kind of blue chip stock?one that will outperform the market average.

Fund managers may also choose some stocks that are undervalued. These stocks are called value stocks.

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 funds.




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