Bob Brinker's Marketimer

  Tuesday November 21, 2017

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PERFORMANCE OF INCOME FUNDS
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As with all mutual funds, the performance of income funds depends upon the performance of the securities in the funds.

The two factors to consider are the current income the fund pays (its current yield), and its potential growth in value.

Income funds whose underlying securities generate high current income will pay larger dividends than funds that earn less income. On the other hand, an income fund whose underlying securities achieve higher growth in value may have a higher total return over time despite lower current income yields.

When shopping for an income fund, you should have a clear objective in mind. Then select the fund that best meets those objectives. An income investor may be more concerned with current yield than total return. Investors who plan to reinvest their dividends may be more interested in funds that show promise of higher future total returns even if their current yields are low.

Now, some concluding words.




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