Income Ratio

Reveals the percentage of current income earned per share. The income ratio can be used as a gauge of how much of the total return comes from income. A high income ratio suggests that the fund depends on dividend distributions or coupon payments to fill out its total return. Conversely, a low income ratio suggests that capital appreciation very likely dominates the total return. It is entirely possible to have a negative income ratio. Since expenses are taken directly out of income (such as dividend or coupon payments), funds with few debt obligations or dividend-paying equities may have negative income ratios.

Fund Company's Calculation:

It is calculated by dividing the net investment income by average NAV. The net investment income is the total income, less operating expenses.


See Also Fees and Expenses.