What Is a Growth & Income Fund?

Growth and income funds typically invest in large-cap companies that pay dividends.

A growth and income mutual fund invests in stocks and bonds that provide reasonable growth and current income. There are two ways to make money in the market: growth and income. A growth and income fund combines both.

Growth

Growth means price appreciation (capital gains) over time--for example, a stock going up in price from $10 to $20 per share. Capital gains can be unrealized or realized. If a fund is holding a stock it bought for $10 that is currently at $20, the gain is unrealized---it's a paper gain reflected in the price of the mutual fund share; it will be realized when the fund sells the stock.

Income

Income comes from stock dividends and bond interest.

Growth and Income Strategies

Growth and income funds typically invest in large-cap companies that pay dividends or in a combination of stocks and bonds, with stocks providing growth and bonds providing income.

Distributions

Funds typically distribute dividend and interest income quarterly in the form of mutual fund dividends, and realized capital gains once a year, usually late in the year.

References

• FINRA: Mutual Funds