Definition of Capital Growth

A rise in the market value of a mutual fund’s securities is known as the capital growth of the mutual fund. This is reflected in its net asset value (NAV) per share. This usually is a long-term objective for many mutual fund schemes.

This growth is measured through the difference between the present market value of an investment or asset and the purchase price or the value of the investment or the asset at the time when it was acquired.

Points to remember

• Companies which have stocks that tend to have the best capital growth usually don’t pay dividends.
• This type of growth is not taxed until and unless the investment or the asset is sold.
• The objectives of capital growth investments can be classified into high or moderate growth.