Income fund

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An income fund is a mutual fund whose goal is to provide an income from investments.[1]

Income funds are often assumed to be bond funds, but they may be stock funds instead, more accurately called equity income funds. Typically these hold stocks with a good history of paying dividends. In fact, a typical income fund holds both stocks and bonds, to gain some of the strengths of both.

The point in any case is that the investor is more interested in income than capital gains, perhaps with the intention the fund will never be sold.

Income funds are often used as the endpoint for target-date funds. As each target-date fund approaches and passes its target date, it becomes more similar to the fund provider's income fund. At some point past the target date, the target-date fund may be merged into the income fund, which will then be owned by all investors whose target dates are some time in the past.[2]

Income funds in Canada

Main article: Income trusts in Canada

In Canada there are a large number of tax efficient entities - public royalty trust and private income trusts - dedicated to generating income, particularly from the energy sector.

Canadian publicly traded royalty trusts

Canadian private energy income trusts

See also

References

  1. ^ Income Fund Definition on Investopedia
  2. ^ TSP: Lifecycle Funds
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