With the current turbulence in the market, many investors are wondering if there is a safe harbor.
Equity-income funds may be the answer.
Equity-income funds seek to provide a high level of current income for their shareholders typically by investing at least 65% of their assets in stocks that pay dividends. The total return for an equity-income fund should be viewed as the combination of high dividend payments and the capital appreciation earned on the stocks held in the portfolio. Stocks that pay high dividends tend to represent companies with a stable growth rate in the mature stage of their life cycle. While these companies may not offer large upside potential, there is a significant degree of downside protection. In a downward market, it is the downside protection that is invaluable.