Usually a diversified portfolio is more stable because a downturn in one sector is usually buffered by gains in another sector. Consequently unless there is a decline in the entire economy, it is unlikely that such a portfolio would depreciate much in value for extended periods of time. A non-diversified fund provides large returns if and only if the industry which the fund focuses upon is in a state of growth. The main types of mutual funds are bond funds, income funds, growth funds and aggressive growth funds. The rest is invested in bonds as the modifier suggests.
Income funds seek large dividends from the companies that they select.
Thus usually their portfolios consists of middle to large-sized firms. In addition, portfolio activity is low. As long as the companies make a profit, you can anticipate a steady income from your investment. Income funds are normally better than bond funds in the long run. This is normally indicated by the rising value, or capital appreciation, of the stock.