Buyers shun global income funds' reach for yield

Fund buyers are steering clear of higher-yielding equity income funds on fears managers are taking too much risk in their quest to deliver payouts.

A multi-year bull market, combined with a need for income in a low-rate world, has meant yields on equities across the globe have compressed since the financial crisis, making it harder for UK and global income funds to meet their objectives. Fund selectors, however, say they would rather accept a lower level of headline payouts than buy into the reach for yield witnessed in some areas. "If we can get 2.5%-3% income from equities, perhaps it is better to stick with these products rather than going for [those yielding] 4.5%-5% and ending up in energy and other riskier sectors," said Jo...