Income Funds and Investment Strategy
Income Funds Create Balance
Income funds can consist of high dividend stocks, high-yield bonds, and fast growth issues of every description. Mutual funds can capture the dynamics of income producing stocks by incorporating indexes that focus on regular, substantial income. In terms of investment goals, retirement and other investor circumstances can indicate a need to include more income stocks and bonds in a portfolio. Income funds can hedge against other sources of volatility such as interest rates and economic downturns by providing income streams while market corrections and trends develop.
Five Leading Income Funds
The Vanguard High Dividend Yield Index Fund (VYM) with low .20 percent fees and a 12 percent year to date yield, is a leading income fund. This income fund tracks the FTSE High Dividend Yield Index. The ProShares S&P 500 Aristocrats ETF (NOBL) is a dynamic, low fee, equity oriented fund that yields 13.74 percent on a year to date basis. It tracks the S&P 500® Dividend Aristocrats® Index which is the highest classification for dividend stocks with long continuous histories of meeting and increasing dividend commitments. The SPDR S&P Dividend ETF (SDY) also tracks the S&P 500® Dividend Aristocrats® Index. It returns 11.99 percent year to date. It tracks the leading long term dividend index with criteria of 20 consecutive years of increasing dividends. WisdomTree Dividend ex-Financials Fund (DTN) offers a year to date return of 12.01 percent with fees of 0.38 percent. It tracks the WisdomTree Dividend ex-Financials Index. Schwab US Dividend Equity ETF (SCHD)has a year to date return of 10.21 percent and fees of 0.07 percent. It tracks the Dow Jones U.S. Dividend 100 Index.
Flexibility and Profits
Income funds provide a stream of income that can balance volatility in other sectors of the market. The current market phase co-exists with a period of record low-interest rates. It also moves with falling oil prices and a worldwide slowdown reflected in lower demand for crude oil. Income streams can hedge against changes in interest policy for those with substantial holdings in bonds. It can soften the impact of the global economic slowdown which can depress equity growth in some sectors. Income funds are not just for retirees or those about to retire. Income funds add flexibility and the critical ability to act quickly to take advantage of market developments and opportunities. There is room in nearly every portfolio for income funds.