This is a fund that invests (usually) in stocks with the novel idea of making more money...that is, the capital invested starts off chubby...and then gets FAT.
While some funds focus on generating recurring income (bond funds, dividend funds, etc.) a capital appreciation fund attempts to invest in stocks that are likely to appreciate in value over time. As such, they often consist of growth stocks (companies that don't pay dividends, but rather, reinvest in themselves to increase their asset values and, ultimately, stock prices) and/or value stocks (stocks that are trading below their "fair value" in hopes that investors will eventually bid them up to where they "belong").
Bottom line: Make your bottom line bigger. Appreciate that capital.
Related or Semi-related Video
Finance: What is an Income Fund?0 Views
Finance a la shmoop. What is an income fund? Well it's a fund designed to
produce income for its investors yeah shocking to hear that I bet. That's [Definition of an income fund written on a 100 dollar bill]
income, cash like bond interest and equity dividends they come in both [Different types of income pointing to a pile of cash]
managed and unmanaged forms like mutual funds and index funds yeah they both [The two types of forms are shown]
have Income Fund flavors and they exist solely to distribute cash to investors
from which you know those investors can purchase luxury items like food and heat. [Income fund distributing cash]
All right well who buys these income funds, while mostly old people generally [Old woman on the phone]
retirees people who can't take a ton of risk and who no longer work for their
cash and while they need it to come from their savings [ATM]
you know the cash to pay the rent in the food thing and those savings have been
socked away for years via hardwork harvesting stuff in the fields or [Money shoved into a sock]
driving people to the airport or you know making assistants disappear and [Bird flies into a hat and disappears into a plume of smoke]
very generally speaking income funds don't really grow at least not all that
much, many of them have target distribution levels like three four five
percent so that excess cash is sent back to the fund holders on a regular steady
basis and the funds boringly live to throw off cash another day, tada! [Guy pulls cash out of the magicians hat]
That's how it goes..
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