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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

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Income fund drops in value

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email

Q: My GNMA and strategic income mutual funds have lost a lot of value over the past year. What can I do?

A: Your funds are designed to produce the highest possible monthly income and are generally referred to as “income funds”. They are not designed to maintain current value or appreciate in value. They will go up and down in value based primarily on changes in prevailing market interest rates but if you hold the funds for the remainder of your life, they are likely to neither gain nor lose value but rather continue generating the monthly income check that was intended. Review your financial situation and goals with OnlineAdviser or another independent and objective financial adviser (not the broker who sold the mutual funds) and if there are no significant changes just leave your funds alone. If appropriate, a shift toward more stock-based investments would help protect you from fluctuations in the interest rate cycle.


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