Is 'herd mentality' threatening the UK equity income sector?

INCOME UNDER THREAT

UK equity income funds are often made up of the same familiar names. But can investors still achieve diversification in the sector? Joanna Faith investigates.

Income investing hit the headlines again this week with the news UK dividends saw their biggest rise since the Lehman crisis after payouts climbed 10% in Q1. Now, experts believe income investors are set to enjoy the best year since 2008 and as such interest in UK Equity Income is only set to heighten. However, the sector is under threat, according to one manager, who believes some funds have become victims of their own success. Martin Brown, who runs the £105.2m Ignis UK Equity Income fund, says “fund size and herd mentality” is limiting the performance of many vehicles in the sector...