Explain what is a growth investment strategy? Please explain why both large capi

Question

Explain what is a growth investment strategy? Please explain why both large capitalised equities and small capitalised equities may be selected in a growth investment fund? Whern does this strategy outperform a Value strategy? 1. Explain the general process of active investments - identifying undervalued securities. 2. Explain how Value and Growth Funds identify undervalued securities. 3. Explain why it is likely that each type investments mostly identify a particular capitalisation of equities and the market conditions they typically do well. Explain why the investments and market conditions may not be limited to that identified in point 3 above. 4.

Explanation / Answer

Growth investment strategy is a style of investment strategy which focuses on capital appreciation. In this style, growth investors, invest in companies that show signs of above-average growth, even if the share price appears expensive in terms of fundamental metrics such as price-to-earnings or price-to-book ratios.

Both large capitalised equities and small capitalised equities may be selected in a growth investment fund as growth funds are typically split by market capitalization, with funds representing small-cap, mid-cap and large-cap groupings.

Growth investment strategy outperform a value investment strategy incase of not able to establish a history of strong earnings growth.

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