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
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
Now, some concluding words.