We have highlighted, on many occasions, the high level of concentration among UK equity income funds – in particular, the fact that many managers in the AIC UK Equity Income and IA UK Equity Income sectors rely on a small handful of mega-cap FTSE stocks for their dividends. This isn’t necessarily an issue in itself, but the fact many of these companies are fundamentally challenged due to low levels of dividend cover compounds the potential problems going forward. For example, in a piece of research we wrote in November , we showed that 10.6% of all income generation in the closed-ended AIC UK Equity Income sector comes from Royal Dutch Shell and BP – and, at the time of writing, both had dividend cover of less than 1x (suggesting that the companies are taking from last year's profits to pay this year's dividend, which isn’t sustainable). Given it is a very similar story in the open-ended IA UK Equity Income sector (whereby the five most popularly-held stocks, which have a dividend over of less than 1x, account for 20% of the total dividends paid in the peer group), many investors have been looking elsewhere to try and find a more reliable income stream. A popular destination for those investors has been the global equity income peer group, where managers literally have the whole world to choose from for income-producing opportunities. Indeed, many funds and trusts in the space market themselves as the natural home for UK income investors seeking diversification. However, as we will highlight in this report, many closed and open-ended funds in the Global Equity Income sectors also have a significant proportion of their assets and income reliant on UK dividend-paying stocks.