And the really good news for investors is that that universe is getting bigger by the minute.
The UK equity income story is still powerful despite its limitations and the oft-quoted comments about seven FTSE stocks paying out more than half the income available; three sectors making up 50% of the FTSE; and 70% of earnings from FTSE-listed companies come from overseas.
Even looking at UK equity income is not as straightforward as it could be with, for example, Neil Woodford’s Invesco Perpetual Income and Higher Income funds being run on a total return basis rather than a rising dividend theme.
More natural income payers, according to Tim Cockerill, head of collectives research at Ashcourt Rowan, are the likes of Tineke Frikkee at Newton, Leigh Harrison and Richard Colwell at Threadneedle and the Schroder Income Maximiser run by Thomas See.
At our Expert Investor Income discussion, we asked the delegates – all wealth managers of various hues including client portfolio managers, fund researchers, analysts and so on – how many generate an income from global equity funds.
The answer, in round figures, was 0%.
Yet this is a rapidly growing area. Ruli Viljoen, head of research at OBSR, explained that while in the UK there are 1,500 companies to choose from, globally there are 15,000; traditionally, however, £52.5bn is invested in the UK but only £7bn in equity income funds that are not UK-dominated.
Of the £7bn, £4bn is in global equity income funds and as recently as eight months ago that figure was just £1.8bn so it is obviously popular with investors and growing.
The Investment Management Association has a global equity income category on its radar and once it has finished a number of high profile reviews it already has in place, global equity income is bound to appear as a separate IMA category.
Once global equity income funds get greater recognition in this way, and investors are more easily able to identify and research them, they will gain even greater dominance in their individual portfolios.
