Concerned that income funds will pay dividends but?

[Kenneth Farr]

I'm seeing some income funds out there that look pretty good on paper, promising 8-12% annual returns with regular distributions with 3-5 year investment.

I'm curious to hear from others on this. My concern is that it's easy to pay dividends for several years while all the capital is coming in for the sponsor and no principal is going out. But what happens when it's time to start returning the principal? How do you know you'll get it back? What's to keep the sponsor from cutting and running after they've raised a few million? Are there any funds that have a proven track record of paying the dividends AND the principal?