Long term growth (LTG) can be defined as an investment technique that tries to expand the worth of a portfolio over a multi year time period.
Albeit long term is relative to an speculators’ time zones and personal style, by and large, long term growth is intended to generate above market returns over a time frame of 10 years or more.
In view of the longer time span, long term growth portfolios can be progressively aggressive in holding a bigger percentage of stocks compared to fixed income products like bonds.
While an intermediate term balanced fund may have 60 percent stocks to 40 percent, a long term growth fund may have 80 percent stocks and 20 percent bonds.
Long term growth is intended to do precisely what it says - provide portfolio growth over a span of time.
The catch is that the growth can be lopsided.
A long term growth portfolio may fail to meet expectations against the market in the primary years and afterwards beat it later, or the other way around.
This is an issue for investors in a long term growth fund. Regardless of whether a fund provides good average growth over a period of 10 years, for instance, the performance year to year will be different.
In this way, investors can have totally different results based on when they buy into the fund and how to what extent they hold.