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What are Go-Go Funds?

Updated on March 17, 2023 , 52 views

If given enough time, many investments can double the initial Capital amount. But, often, investors get drawn to high returns in short periods, despite the chance of unappealing losses. Investors instantly recognize an investment to be a risky one when an investment instrument provides a high rate of return in a short period. There are, however, some examples of assets that have more than quadrupled in a short period.

Go-Go Funds

For every one of these, there have been hundreds that have failed, so the buyer must exercise caution. Mutual Funds with high risk and above-average returns are known as Go-Go funds.

A go-go fund is a mutual fund that invests in high-risk equities to achieve above-average returns. The aggressive approach of a go-go fund often entails having significant stakes in growth stocks. Growth equities have more risks but also more significant potential gains.

How do Go-Go Funds work?

Go-go funds lure investors with huge, anomalous returns generated by altering Portfolio weights around speculative information. Throughout that decade, investors flocked to the stock Market in record numbers. Over the course of ten years, mutual fund investments more than doubled. These funds may have given higher rewards to some investors, but they also carried a high level of risk. To generate high rates of return, these funds frequently made speculative investments, which did not always pay off.

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Objective of Go-Go Funds

The stated objective of Investing in speculative assets like go-go mutual funds is to provide investors with higher-than-average returns; these investments also carry significant risk. As it is obvious that higher returns come at a cost. Since speculative securities are considered exceptionally dangerous investments, investors considering go-go funds should have relatively high-risk tolerance levels.

Indeed, market speculation is considered a sort of gambling. Many go-go funds rose in value throughout the 1960s, only to plummet and, in some cases, go out of business as their speculative investments failed.

The Bottom Line

Small and medium-sized businesses are often riskier for investors. However, they also turn out to be top firms in the future, generating better returns as well. Professional Small and mid cap fund Managers are ideally suited to identifying such high-potential stocks. These funds are appropriate for active investors with a 7-year or longer investment horizon. Also, these funds' investment values can experience considerable Volatility in the short-to-medium term.

All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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