Is income concentration really a problem for UK investors?

Toby Thompson, manager of the Brooks Macdonald Global Equity Income fund, analyses if equity investors are right to be concerned about the concentration of income from only a limited number of mega-cap companies

There has been much written recently about the dangers of an over-reliance in the UK equity market on a small number of income generating stocks. There is certainly a prima facie case for such concern, but is it something equity income investors should be worrying about, or is it simply scaremongering? The building blocks for the case of too much concentration is fairly straightforward. There are some very large companies within the UK market that also provide significant yields. Indeed, nine of the top ten companies by market capitalisation yield more than the index.  The only except...