Income funds, by their definition, are meant for investors looking out for stable and secure returns on a monthly, quarterly or an annual basis. They work like any other mutual fund scheme, albeit, without much scope of capital appreciation.
Income funds are likely to do well in the first few months of the year as inflation continues to fall. Fall in inflation leads to a fall in interest rates which in turn results in an increase in the value of units of income funds.
In other words, the fall in interest rates could lead to capital appreciation. An investor getting good returns on income funds should book profits and move.
Also see: Seven golden home loan rules
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