UK equity income funds set to benefit from sterling slump

UK equity income funds are poised to benefit from a decline in sterling as their portfolios reap the rewards of positions in dollar-denominated dividend payers and overseas earners.

As reported in last week's Investment Week, fund managers and strategists have begun reducing exposure to sterling amid suggestions the Bank of England is seeking a weaker currency and fears a potential UK downgrade could derail the pound. UK equity income funds with holdings in overseas earners which declare their dividends in US dollars are set to receive a boost from the pounds decline. Capital Economics said this week that concern is building that the pound "is on the brink of a sharp fall", echoing other analysts' views. Sterling has lost more than 1% against the dollar alread...