UK Accounting Glossary
An income fund is a mutual fund structured to provide maximum income. To achieve this goal, an income fund selects investments that typically provide dividends or interest. These investments include bonds, especially high-yield bonds; and preferred stocks, which guarantee dividends. Blue-chip stocks often provide income as well, since they are the stocks of large companies that can afford to pay dividends. An income fund is popular among risk-averse investors, including the retired, who want to preserve as much of their assets as possible. An income fund does not grow in value as much as a growth fund; this is the trade-off for the current earnings of the income fund. An income fund typically invests in low-growth sectors of the economy.
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This glossary post was last updated: 9th February 2020.