Reviewed by Aug 27, 2020| Updated on
Income funds are a class of mutual funds that prioritise providing a constant regular income for investors. These funds focus on generating regular income by investing in high dividend-generating stocks, certificate of deposits, government securities, money market instruments, corporate bonds, and debentures.
Understanding Income Fund
Income funds typically invest in various municipal, corporate, and government debt instruments. They also invest in preferred stocks, money market instruments, and stocks offering regular dividends payouts.
The Net Assets Value (NAV) of an income fund is calculated to a maximum level of 4 decimal points. Income funds try to deliver returns both in declining and rising interest rate scenarios, and actively manages the portfolio.
Factors to Consider
- Income funds are for those investors who wish to have a steady and regular income.
- These funds invest in quality stocks and high-quality debt papers.
- Income funds do not focus much on capital gains.
- Income funds carry less risk concerning default.
- Conservative investors who wish to earn better returns as compared to the conventional havens may invest in income funds.