Income fund is a mutual fund that typically invests in securities that consistently produce a steady income, such as bonds or dividend paying stocks. Its primary goal is to provide income to shareholders from investments. This involves investing in securities with lower risk than other portfolios. It is synonymous with bond funds; however, income funds may hold stocks instead more accurately called equity income funds.
Investors, especially those who have retired or are about to retire, may prefer income funds to potentially more volatile growth funds.