An income fund is a
fund Fund may refer to:
* Funding is the act of providing resources, usually in form of money, or other values such as effort or time, for a project, a person, a business, or any other private or public institution
** The process of soliciting and gathe ...
whose goal is to provide an income from investments. It is usually organized through a
trust
Trust often refers to:
* Trust (social science), confidence in or dependence on a person or quality
It may also refer to:
Business and law
* Trust law, a body of law under which one person holds property for the benefit of another
* Trust (bus ...
or partnership, rather than a corporation, to obtain more efficient flow through tax consequences in relation to the income it earns and distributes.
An income fund is a type of asset allocation fund.
Income funds are often assumed to be
bond fund
A bond fund or debt fund is a fund that invests in bonds, or other debt securities. Bond funds can be contrasted with stock funds and money funds. Bond funds typically pay periodic dividends that include interest payments on the fund's underlyi ...
s, but they may be
stock fund
A stock fund, or equity fund, is a fund that invests in stocks, also called equity securities. Stock funds can be contrasted with bond funds and money funds. Fund assets are typically mainly in stock, with some amount of cash, which is genera ...
s instead, more accurately called ''equity income funds''. Typically these hold stocks with a good history of paying
dividend
A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-i ...
s. 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.
See also
*
Stock fund
A stock fund, or equity fund, is a fund that invests in stocks, also called equity securities. Stock funds can be contrasted with bond funds and money funds. Fund assets are typically mainly in stock, with some amount of cash, which is genera ...
*
Bond fund
A bond fund or debt fund is a fund that invests in bonds, or other debt securities. Bond funds can be contrasted with stock funds and money funds. Bond funds typically pay periodic dividends that include interest payments on the fund's underlyi ...
*
Money market fund
A money market fund (also called a money market mutual fund) is an open-ended mutual fund that invests in short-term debt securities such as US Treasury bills and commercial paper. Money market funds are managed with the goal of maintaining a ...
*
Target date fund
A target date fund (TDF), also known as a lifecycle fund, dynamic-risk fund, or age-based fund, is a collective investment scheme, often a mutual fund or a collective trust fund, designed to provide a simple investment solution through a portfol ...
*
Income trust
An income trust is an investment that may hold equities, debt instruments, royalty interests or real properties. They are especially useful for financial requirements of institutional investors such as pension funds, and for investors such as retir ...
*
Exchange fund
An exchange fund or swap fund is a mechanism specific to the U.S., first introduced in the late 1960s, that allows holders of a large amount of a single stock to diversify into a basket of other stocks without directly selling their stock.
The p ...
References
{{DEFAULTSORT:Income Fund
Investment funds