What are monthly income funds?


Quick Answer

An income fund is an investment plan with the purpose of returning a regular income paid out to the investor at set intervals, usually monthly or quarterly, according to Investopedia. A monthly income fund generates income via investment in intangible assets, such as government bonds and bank loans.

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Full Answer

Income funds provide a variable income depending on the volatility of the specific fund and the condition of the market. Income funds are a form of mutual fund, which are collective public funds run by professional money managers, allowing smaller investors access to the expertise of an experienced investor and the diversification of a large pool of capital, explains InvestorWords. They require minimal attention from investors. However, mutual funds also allow little-to-no input from investors on the decisions of the money managers and often have high initial minimum investments to maintain the fund's economy of scale.

Mutual funds do not have universally consistent objectives and cater to a variety of investors with different interests. Income funds in particular emphasize current income, which primarily focuses on regular returns from an investment through dividends and interest. Nonincome mutual funds may hold capital appreciation as their objective, which instead emphasizes overall gains in the value of the fund's assets, notes Investopedia.

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