The immediate outcome of a market crash to mutual funds is a drastic reduction of investment income. The returns earned from your mutual funds will take a hit, and the streams will decline or dry up. Though bonds and debt securities have a high tolerance to risk, they will equally feel the pinch but not as hard as stocks. To shield yourself from these adverse effects, you should ditch leveraged funds, spread your risks through diversification, invest in bonds funds, or even invest in noncyclical funds, among other tactics.