Equity Income fund can be defined as an income fund that is a type of mutual fund mostly made up of the dividend paying stock. There are a number of income investments that made up together to form an equity income fund. These income investments are offered by trustworthy and creditworthy companies as they issue consistent dividend payments to the investors. In general terms equity income fund is formed by investing into the young and credit worthy companies that are having a high growth.
There are certain equity funds that only invest in the stocks those results in a specific dividend yield or these equity income funds only invest in certain types of issuers or the stocks that have certain characteristics such as preferred stocks including different type of credit ratings. Equity income funds are still considered as conservative investment strategy although they pay more than the bond funds and the money market.
Equity income fund is a great alternative to the money market and the bond funds as they offer more as compared to these above mentioned financial instruments. This is the best investment tool as it can hold a number of different kinds of individual investments. Equity income funds are more volatile as compared to bond fund or the money market so investors that are investing for less than a year are not advised to invest in equity income fund.
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