The capital appreciation is an increase in the price or value of the assets. It can refer to the company's appreciation in stocks or bonds held by an investor, an increase in the valuation of the land, or another increase in revaluation of fixed assets.
The capital appreciation can occur in a passive and gradual manner, without the investor taking any action. It is distinguished from a capital gain, which is the profit realized from the sale of an asset. The capital appreciation may or may not be shown in the financial statements; if proven, by the revaluation of assets, the increase is called being "recognized". Once the asset is sold, the appreciation from the date you initially purchase the assets becomes a "realized" gain.
When the term is used in to the valuation of stocks, capital appreciation is the goal of an investor looking for long-term growth. This is a growth in the amount of capital invested, but not necessarily an increase in the current income of the assets.
In the context of a mutual fund investment, the capital appreciation refers to an increase in the value of securities in a portfolio that contributes to growth in the net asset value. A capital appreciation fund is a fund for which is its main objective, and consequently is invested in growth stocks.
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