Here are five funds that allow investors to diversify away from the usual suspects in the UK Equity Income sector.
Charlemagne Magna Emerging Markets Dividend
The standout performer in terms of both income and total return is the €49.5m Charlemagne Magna Emerging Markets Dividend fund.
Its yield of 3.97 per cent makes it the second highest-yielding fund in the sector behind UBS Emerging Markets Equity Income.
The average figure is 3.98 per cent for the Sterling Corporate Bond sector and 4.4 per cent for Sterling Strategic Bond.
It is also the fourth best-performing portfolio over the past year, returning 21.27 per cent compared with 5.63 per cent for the IMA Global Emerging Markets sector.
Since launch in June 2010, the fund has made an impressive 36.98 per cent, compared with 14.51 per cent from the sector.
Performance of fund vs sector since launch
Source: FE Analytics
The Dublin-domiciled portfolio is headed up by Mark Bickford-Smith and Charlemagne’s chief investment officer Julian Mayo.
Over the last year, the fund has added more Alpha – or value above the momentum of the assets in the portfolio – than almost any other fund.
Only First State Global Emerging Markets Sustainability, McInroy & Wood Emerging Markets and Aberdeen Global Emerging Markets Smaller Companies managed to beat it.
The fund’s highest sector weighting is to financials, with African Bank Investments and the Bank of China sitting in its top-10 holdings. The fund also holds Taiwan Semiconductor Manufacturing, a staple of the outperforming Aberdeen Global Emerging Markets fund.
The fund requires a minimum investment of £5,000 and carries an ongoing charges fee (OCF) of 2.22 per cent.
Bestivest's Ben Seager-Scott says: "This is a pretty solid fund managed by a house that specialises in emerging markets and has a lot of experience in-house."
"The manager uses a 'four-eyes' process where stock-picks are championed by an analyst while the rest of the team challenge the assumptions to make sure their selections are suitably road-tested."
Polar Capital Emerging Markets Income
Over the past year the $313.4m Polar Capital Emerging Markets Income fund has been one of the best performers in IMA Global Emerging Markets.
Since launch in January 2011, it has made 21.22 per cent, compared with 0.42 per cent from the sector, according to FE Analytics.
The MSCI Emerging Markets index lost 0.23 per cent over the period.
Performance of fund vs sector and index since launch
Source: FE Analytics
The fund is yielding 3.6 per cent.
The Polar fund is managed by William Calvert, who Seager-Scott says has a strong track record in the space.
"Having jumped ship from running emerging market equities at AXA, William Calvert now runs this fund."
"It looks for companies with a high level of sustainable earnings growth, and where income will combine to provide attractive returns over the long-term," he said.
The manager is exposed to various emerging regions through Sberbank of Russia, Brazilian telecommunications group Telefonica Brasil and Singapore-based Macquarie International Real Estate.
Samsung Electronics is the top holding in the fund.
It has an OCF of 1.74 per cent.
Newton Emerging Income
Rob Gleeson, head of FE Research, says the Newton portfolio is a good choice for investors looking for exposure to broader emerging markets for income.
"I like the strategy. It’s the same thing as Newton Asian Income," he said. "Newton know how to do income."
"In my view this is the most exciting launch in this area for quite some time, and has a lot of potential," Seager-Scott added.
"The fund is not rated by Bestinvest since the group lacks a long-enough track record in Emerging Markets to be eligible."
"The fund is co-managed by Sophia Whitbread and Jason Pidcock. While the latter is well known for running the highly successful Newton Asian Income fund, it is Sophia who drives the ex-Asia part of the fund that is the real differentiator."
"I have met her a couple of times. She has strong credentials and excellent stock knowledge, the only thing missing at the moment is experience managing money in a public fund, but this will come with time."
"The fund has a great deal of potential, it is definitely one to watch."
Although the portfolio only has a three-month track record, it has experienced massive inflows and has already reached £174.5m in size.
Since launch has made 15.29 per cent while the sector and FTSE All World Emerging index have gained 10.59 per cent and 10.12 per cent respectively.
Performance of fund vs sector and index since launch
Source: FE Analytics
While Gleeson likes the fund, he warns that its major sector bets – healthcare and consumer staples – are not as diversified as other funds' in the market.
"Because of globalisation, if an industry suffers in the UK, it’s going to suffer elsewhere," he said.
The fund’s largest sector bet is financials, at 27.8 per cent of AUM; however, no banks are in its top-10 holdings.
Brazilian tobacco company Souza Cruz, Taiwan Semiconductor Manufacturing and Bangkok Expressway – an international motorway from Kunming to Bangkok – feature in the fund’s top-10.
It requires a minimum investment of £1,000 and has an OCF of 1.75 per cent.
It is yielding 3.47 per cent.
JPM Emerging Markets Income
Although it has the lowest yield of the funds mentioned on this list, the JPM Emerging Markets Income fund is paying out 3.45 per cent and is still fairly small, at £56.7m.
"This is a recently-launched open-ended version of JP Morgan’s Emerging Markets Income investment trust," Seager-Scott said.
"JPM have a great depth of resource, with teams of analysts and portfolio managers on the ground across the emerging markets."
"These teams take a lot of the responsibility for creating regional stock selection, offering up their top-10 income stocks for each region."
"The effect of managing cashflows may cause the OEIC to slightly underperform the investment trust over time, but it is still a strong offering."
Since launch in July last year, the fund has performed broadly in line with the sector and MSCI Emerging Markets index, returning 16.64 per cent.
Performance of fund vs sector and index since launch
Source: FE Analytics
The fund is headed up by Richard Titherington who also runs JPM Emerging Markets Opportunities and JPMorgan Global Emerging Markets Income Trust.
It is also the least volatile of the portfolios over the last six months, with an annualised score of just 3.74 per cent. It is the only fund that is less volatile than the sector over that period.
The fund’s two highest sector plays are in telecommunications, media and technology, and consumer products; however, the largest holding in the fund is leading Brazilian and Latin American bank Banco do Brasil.
Sberbank of Russia and the Bank of China are also in its top-10 holdings.
The fund requires a minimum investment of £1,000 and carries an OCF of 1.68 per cent – making it the cheapest of the four portfolios.