Income hunters look further afield in yield search

With a shrinking list of large companies driving market yield, UK investors are using funds utilising derivatives for extra dividend

Fund management houses and investors are seeking more sophisticated tools or emerging regions in their hunt for income. The trend comes as more and more funds in the UK Equity Income sector are failing to deliver their yield targets. Investment Week reported earlier this year that nearly half of the UK Equity Income sector is missing the yield target of 110% of the FTSE All Share. With many funds exposed heavily to financials, it is inevitable the yields will fall further as more casualties of the credit crunch are unearthed. In recent years, income-oriented launches include fixed-inter...