Capital Gains

Chapter 3 page 9

Investor seeking capital gains must be willing to invest in the riskier types of mutual funds that offer the possibility of capital gains. Although fixed-income funds offer some capital gains potential, most capital gains are offered by equity growth funds.

Portfolios consist of companies that tend not to pay current dividends but whose shares may increase in value over time. Equity growth funds can be highly volatile, so they are suitable mainly for clients with long-term investments horizons. Over the long-term, growth funds should increase the client's wealth.

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