2017's Top Income Funds You Should Know

An income fund is a mutual investment vehicle that prioritizes steady current income over capital appreciation. It primarily invests in dividend-paying stocks and bonds, including real estate funds, to generate regular income for investors. These funds are often part of asset allocation strategies and may include bond funds, equity funds, or real estate holdings. They are commonly chosen as target date fund options for stable income growth.

As of mid-2017, the leading income funds based on performance include Boost NASDAQ 100 3x Leverage Daily ETP (85.14%), VT Morningstar Informed Smartfund Growth Strategy Z Inc (79.49%), Boost EURO STOXX 50 3x Leverage Daily ETP (70.16%), Neptune European Opportunities B Inc GBP (58.59%), Neptune European Opportunities B Accumulation GBP (58.58%), VT Morningstar Informed Smartfund Cautious Strategy Z Inc (53.96%), Aptus Global Financials B Inc GBP (52.99%), Aptus Global Financials B Accumulation GBP (52.99%), VT Morningstar Informed Smartfund Balanced Strategy Z Inc (51.04%), and Baillie Gifford Greater China B Accumulation (47.38%).

According to TheStreet, a U.S.-based financial news platform, the top income funds shortlist includes VictoryShares US Discovery Enh Vol (CSF), PowerShares S&P 500 High Dividend Low Vol (SPHD), WisdomTree Fundamental US HY Corp Bond (WFHY), UBS AG FI Enhanced Global HY ETN (FIHD), First Trust Pref Sec and Inc (FPE), Guggenheim BulletShares 2023 High Yield Co Bond (BSJN), First Trust Managed Municipal (FMB), PowerShares Natl AMT-Free Muni Bond (PZA), WisdomTree Short Term High Yield CB (SFHY), and PowerShares Preferred Portfolio (PGX).

While income funds focus on providing current income, they also offer opportunities for capital growth without significant sacrifice. Some notable funds like The New Economy Fund, launched in 2015 with $15 billion in assets, invest heavily in foreign equities such as Netflix, Alexion Pharmaceuticals, and Hologic, targeting long-term capital appreciation. The AMCAP fund, established in 1967, with $45 billion in assets, primarily invests in value stocks with solid growth potential in healthcare and technology sectors, including holdings like Amazon and Netflix. Similarly, the Growth Fund of America, founded in 1973 and managing $141 billion, emphasizes stocks in major international corporations, aiming for steady returns. The Washington Mutual Investors Fund, since 1952, with $75 billion in assets, focuses on industrial sectors like Microsoft and Boeing, balancing income and capital growth. The Fundamental Investors Fund, launched in 1978 with $71 billion, aims for growth and income, primarily through equity investments.

For 2017, Forbes recommends investing in funds such as Driehaus Emerging Markets Small Cap Growth Fund, which employs growth strategies, and Ridgeworth Seix Floating Rate High Income Fund, which benefits from rising interest rates via floating rate bonds. Additionally, the Vanguard FTSE All-World ex-US Index Fund offers exposure to international stocks with valuation-based pricing. As interest rate hikes are expected to be modest in 2017, dividend yields around 6-7% are anticipated, and investors may consider switching from common stocks to preferred shares to boost dividend income substantially.