I Own What?! Income Funds That Pay None

Every stock fund has a name and a style, but they don't necessarily have much to do with one another.

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This week's I Own What?! highlights a case in point. There are more than 90 stock funds with "growth and income" in their names and at least a one-year track record. Over the past year, however, almost a third of these funds have failed to pay a penny in dividends to shareholders, according to Chicago fund tracker Morningstar. This seems a bit like buying a vacuum cleaner, only to find that it's actually a snowblower.

You might be wondering how this sort of thing happens. The reasons are twofold: A fund's charter typically gives it plenty of leeway; meanwhile, companies just aren't paying dividends like they used to. Regulators are starting to require funds' names and strategies to be more than remotely related, but no matter what a fund's name promises, you can't assume it will deliver.

Of the 28 growth and income funds that haven't paid a dividend in the past 12 months, we've singled out the five biggest: the $1.8 billion (CFGAX Quote)Liberty Growth & Income fund, the $950 million (FGIRX Quote)Fidelity Advisor Growth & Income fund, the $808 million (SGRIX Quote)Strong Growth & Income fund, the $710 million (EGIAX Quote)Evergreen Growth & Income fund, and the $531 million (MGRIX Quote)Marsico Growth & Income fund.

Some of these folks are pretty upfront about the fund's income component -- or lack thereof. On the Marsico Growth & Income fund's Web page, you'll find that although at least a quarter of the fund's money is invested in "securities that have income potential," the fund isn't "designed to produce a consistent level of income." ...