The term go-go fund refers to a portfolio of high-risk securities that attempts to provide investors with above average returns. While the stated objective of a go-go mutual fund is to provide individuals with higher than average returns, there is considerable risk associated with these investments too.
The term go-go fund has its origins back in what are known as Wall Street’s “go-go” decade of the 1960’s. Individuals began investing heavily in the stock market, as mutual funds’ assets rose from $15 to nearly $50 billion over ten years. As individual confidence increased in the ability of the market to provide sustained growth, so did interest in what would later be classified as speculative investments.
Today, the investment strategy of go-go funds remains the same. The objective is to provide individuals with above average returns by investing in speculative securities. The possibility of realizing higher returns does come at a cost. Investors choosing go-go funds should have relatively high risk tolerance scores, since speculative securities are considered extremely risky investments. In fact, speculating in the market is thought to be a form of gambling.