Income Fund is a type of mutual fund that emphasizes current income, either on a monthly or quarterly basis, as opposed to capital appreciation. Such funds hold a variety of government, municipal and corporate debt obligations, preferred stock, money market instruments, and dividend-paying stocks. Share prices of income funds are not fixed; they tend to fall when interest rates are rising and to increase when interest rates are falling. Generally, the bonds included in the portfolios of these funds are of investment grade. The other securities are of sufficient credit quality to assure a preservation of capital. There are two popular high-risk funds that also focus mainly on income: high-yield bond funds and bank loan funds. The former invests primarily in corporate "junk" bonds and the latter in floating-rate loans issued by banks or other financial institutions.
Income Funds in India provide to the investors regular income and also stability of capital. Income Funds in India usually invest their principal in securities of fixed income such as government securities, bonds, and corporate debentures. There are many mutual funds houses that have launched Income Funds in India. Income Funds in India usually invest their principal in companies that give high payouts of dividends and also in securities of fixed income such as corporate debentures, government securities, and bonds. The advantage of Income Funds in India is that it provides regular income to the investor either on a monthly or quarterly basis. Further the advantage of Income Funds in India is that it also provides stability of capital to the investor. Income Funds share prices are not fixed for they have a tendency to grow with the fall in interest rates and fall with the rise of the interest rates. The bonds that are there in Income Funds are usually of the investment grade. The other bonds are of such credit quality that they assure the protection of the capital.
Mutual fund companies that have launched Income Funds in India are:
- Prudential ICICI Mutual Fund
- HDFC Mutual Fund
- Reliance Mutual Fund
- Birla Sun Life Mutual Fund
- Franklin Templeton India Mutual Fund
- Tata Mutual Fund