Top 5 Equity Income Mutual Funds (March 2011)

Investors seeking regular income flows and having the willingness to forgo capital growth often select equity funds promising income for their investment needs. The presence of both debt and equity income funds in a portfolio also increases diversification. Further, equity income funds provide a steady and regular income stream from dividends which can go a long way in healing losses made by falling stock prices. Equity income funds provide investors with a convenient method of holding a diversified portfolio which generates a regular income stream.

Below we will share with you 5 top rated equity income mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future.

Fidelity Equity-Income II (FEQTX) seeks reasonable income with capital growth as a secondary objective. The fund invests the majority of its assets in income equity securities which generate income. The fund may also purchase other types of equity securities and invest in debt. It invests in both domestic and foreign securities. The equity income fund returned 20.81% in the last one year period.

The equity income mutual fund has a minimum initial investment of $2,500 and an expense ratio of 0.69% compared to a category average of 1.27%.

FAM Equity-Income (FAMEX) invests a large proportion of its assets in income generating equity securities which pay out regular dividends. The fund focuses on acquiring common stocks and related convertible securities such as convertible bonds and preferred stocks. The equity income mutual fund has a ten year annualized return of 5.74%.

Paul Hogan is the fund manager and she has managed this equity income mutual fund since 1996.

Neuberger Berman Equity Income A (NBHAX) seeks total return. The majority of its assets are invested in equity securities which generate income. This includes convertible securities, common stocks and master limited partnerships. The equity income mutual fund returned 22.83% in the last one year period.

The equity income mutual fund has a minimum initial investment of $1,000 and an expense ratio of 1.16% compared to a category average of 1.36%.

American Century Equity Income (TWEIX) invests primarily in equity securities with proven track records of paying out regular dividends. The fund seeks out securities which are undervalued and whose price rise appreciably. The equity income mutual fund has a five year annualized return of 4.08%.

As of December 2010, this equity income mutual fund held 67 issues, with 5.01% of its total assets invested in ExxonMobil Corporation.

Huntington Income-Equity Trust (HIEFX) invests at least 65% of its assets in equity securities which generate significant levels of income. Common and preferred stock as well as other equity securities constitute the bulk of its investments. The equity income mutual fund returned 19.77% in the last one year period.

The Fund Manager is Craig J Hardy and he has managed this equity income mutual fund since 2003.

To view the Zacks Rank and past performance of all equity income mutual funds, then click here.

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