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Can anyone explain to me the difference between core, value and growth funds/stocks? I note, for example, that Investors Business Daily categorizes stock funds this way, for various cap sizes.

Any help on this would be greatly appreciated.

-- Terry
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Greetings Terry,

Can anyone explain to me the difference between core, value and growth funds/stocks?

From on value and growth funds:

Growth fund:
"A mutual fund whose aim is to achieve capital appreciation by investing in growth stocks. They focus on companies that are experiencing significant earnings or revenue growth, rather than companies that pay outdividends. The hope is that these rapidly growing companies will continue to increase in value, thereby allowing the fund to reap the benefits of large capital gains. In general, growth funds are more volatile than other types of funds, rising more than other funds in bull markets and falling more in bear markets."

Value fund:
"A mutual fund that invests in companies which it determines to be underpriced by fundamental measures. Assuming that a company's share price will not remain undervalued indefinitely, the fund looks to make money by buying before the expected upturn. Value funds tend to focus on safety rather than growth, and often choose investments providing dividends as well as capital appreciation. They invest in companies that have low P/E ratios, and stocks that have fallen out of favor with mainstream investors, either due to changing investor preferences, a poor quarterly earnings report, or hard times in a particular industry. Value stocks are often mature companies that have stopped growing and that use their earnings to pay dividends. Thus value funds produce current income (from the dividends) as well as long-term growth (from capital appreciation once the stocks become popular again). They tend to have more conservative and less volatile returns than growth funds. "

A Core fund is simply a fund that is a mixture of growth and value stocks enough to not be categorized as growth or value. It is worth noting that there are various price ratios that may be used to determine growth or value as for example BARRA uses Price/Book while Russell has a combination of factors as noted in .

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