The IMA recognised this had become an established area of investment and not a short-term fad, as some investors believed it would be following the first few launches.
To meet sector requirements, 80% of the fund must be invested in global equities, diversified by geographic regions. The sector also requires funds to produce an annual income yield 110% higher than the MSCI World Index in order to qualify.
The sector’s increasing popularity among investors is unsurprising. Equity income funds have long allowed investors to have their cake and eat it, in that they provide an attractive growing income and potential for long-term capital growth.
Click here for an overview of the sector's standout funds