How can wealth managers reduce income fund concentration risks?

Concentration risk in the UK equity income sector is a well-versed issue, but how can wealth managers find a way around the problem? Katie Holliday reports.

The top-heavy nature of the UK equity income sector is a common gripe for investors and one that has prompted a spate of alternative regional income products in recent times. The problem with the UK equity income sector is that the bulk of available dividends are heavily concentrated around a select group of stocks. The latest Capita Dividends Monitor report demonstrated this issue clearly, stating that 39% of dividends paid by UK companies in the second quarter of 2012 were derived from just five stocks in the FTSE 100. Firm favourites include GlaxoSmithKline, which is held in 79 of ...