The best global equity income funds from our experts

Global equity income funds are attractive because they offer investors the prospect of both a revenue stream and longer-term capital growth.

Such portfolios invest in companies around the world that pay shareholders consistent – and, hopefully, rising – dividends out of their profits. These businesses are usually stable and reliable, benefitting from strong ongoing demand for their products/services and solid barriers to entry. As well as being profitable, these stocks are also expected to be rewarded with share price increases over time, enabling them to grow investors’ capital.

The best global equity income funds offer international diversification, experienced professional management teams and strong dividend yields. They have exposure to various regions and an established investment process that focuses on finding companies with strong balance sheets and proven dividend policies.

The payment of regular dividends is regarded as a good way for investors to generate a revenue stream, as well as growing their longer-term wealth. This is because investors can either use the payouts as a source of income or reinvest them to benefit from the effects of compounding.

As well as being attractive to income seekers, global equity income funds are favoured by those wanting to take a more conservative approach with their money, particularly if they’re nearing retirement. They can be used as building blocks for a more broadly diversified portfolio due to having international stock market exposure, as well as their income and growth focus.

So, how can you find the right global equity income fund to meet your needs, what are the key qualities they must possess, and are there potential downsides to consider? In this guide, we’ll look at how these portfolios work, outline the terms you’ll need to understand, and explain how to find the most suitable funds.

Understanding global equity income funds

Let’s kick off with an overview of global equity income funds. These portfolios are suitable for a wide range of investors as they aim to provide income and capital growth. Managers of these funds will search for companies that pay consistent and rising dividends to shareholders out of the profits they have generated.

The good news is that global dividends hit a record $1.75 trillion in 2024, up 6.6% on an underlying basis, according to the latest Janus Henderson Global Dividend Index. Microsoft, Exxon Mobil, HSBC Holdings and Apple were among the world’s biggest dividend payers, with the top 10 names paying out a combined $145.9 billion*.

Read more: Record global dividends in 2024 as Meta, Alphabet and Alibaba join the party

Global equity income funds make money from being paid dividends (as shareholders in the underlying companies) as well as share price increases. These gains will be passed down to the funds’ investors, obviously once the various portfolio fees and charges have been deducted.

Key factors to consider when choosing a fund

Now we’re going to look at the key qualities to look for in a global equity income fund.

Dividend yield and consistency

Firstly, there are a few terms that you will come across. The first is dividend yield. This is a financial ratio that illustrates how much a company pays out each year in dividends, relative to its stock price. This calculation, which is expressed as a percentage, sees annual dividends per share divided by the current share price, and then multiplied by 100. For example, if a company pays out £3 in annual dividends and its stock price is £60, the dividend yield will be 5%. However, similar calculations apply to investment funds.

The historic yield is a ratio that takes the actual income paid out over the past 12 months, divides it by the current fund price, and then multiplies the result by 100. You may also hear about distribution yield. This suggests how much a fund might hand out over the coming year, based on its most recent payment. This gives investors an idea of what to expect.

While yield helps you compare the income potential from different funds, there are other factors to consider. One of them is dividend consistency. This refers to an investment fund’s track record of paying regular dividends to its investors – and how much they actually hand over.

It’s worth remembering that funds can be forced to cut their dividends due to factors such as the portfolio’s constituents failing to achieve consistent income growth.

Fund performance and manager track record

The best global income funds will be run by managers with track records of finding companies that pay consistent – and increasing – dividends to investors. Look for those who have delivered strong performances in various market conditions. While past returns are no guarantee of future success, this still speaks to their abilities.

Having an established, disciplined investment process is important, as well as the support of analysts with the knowledge to scrutinise stocks. Of course, a disappointing recent performance doesn’t necessarily mean they should be automatically discarded, as certain areas may have simply fallen temporarily out of favour. For example, the stock market may have been more focused on rewarding fast-growing technology companies than steadier, dividend payers.

However, it’s worth acknowledging that there are potential downsides to global equity income funds. More defensive, dividend-paying stocks often don’t enjoy the rapid share price hikes of headline-grabbing growth companies in fast-moving sectors such as technology.

Geographic and sector diversification

A major attraction of global equity income funds is the fact their managers aren’t restricted to finding opportunities within one country. They can scour the world for attractive dividend-paying companies, which gives them a far larger investment universe and more chance of finding winners. In fact, for a fund to be listed in the IA Global Equity Income sector it must be diversified by geographic region. This information can be found in the fund’s monthly factsheet, which includes a breakdown of the 10 largest holdings and commentary from the fund managers discussing recent performance.

Comparative analysis of top funds

One way to establish the best income funds is by a comparative analysis. There are a variety of measures to consider – and factors to bear in mind – when examining portfolios. For example, you can look at portfolios by historic yield, as well as annual growth achieved. These will give you a broad idea of how they compare. The best performing global equity income funds enjoyed growth of almost 27% in 2024, while the worst managed less than 3%**. There’s also a lot to be said for consistency of returns. For example, the JPM Global Equity Income fund has delivered a positive return for investors in 8 of the past 10 years***.

However, you’ll also need to look at the charges levied. A fund may achieve a spectacular return but this won’t be so attractive if its fees are twice as much as rivals. The ongoing charges, meanwhile, range from 0.15% to 1.63%. If your fund has fees at the higher end then you’ll need to ensure its returns are better than the majority of its competitors.

Another way to compare funds is by their holdings. If a fund has a high exposure to emerging countries this suggests that it could be riskier and its performance more volatile. In contrast, funds that are well diversified in terms of geographic and sector allocation may be more cushioned as they’re not reliant on a handful of areas outperforming.

How to invest in global equity income funds

There is certainly no shortage of options when it comes to global equity income funds – and it’s an increasingly popular area with UK investors. The latest Investment Association data shows this sector has £25.7 billion of funds under management, representing a £9.6 billion increase over the past three years****.

So, what are the ways in which you can join these investors? At the time of writing, FundCalibre currently rates seven global equity income funds. This list can be a good starting point for investors overwhelmed by the volume of funds available. Here, we give a brief overview of the currently rated funds, all of which have delivered a positive return net of fees over 3, 5 and 10 years (where the track record is available)^:

Fidelity Global Dividend — Led by an experienced manager in Dan Roberts, this is a core global income fund. The fund invests in companies which offer a healthy and sustainable dividend yield and aims to pay a regular and growing income itself, while preserving capital.

Guinness Global Equity Income — This fund aims to provide investors with both income and long-term capital growth. The portfolio typically consists of around 35 equally-weighted stocks, which the managers aim to hold for three to five years.

IFSL Evenlode Global Income — Managers Ben Peters and Chris Elliott believe the market fundamentally underestimates the value of high quality businesses because of its obsession with short-term events. This fund aims to balance the income received today with future dividend growth.

JPM Global Equity Income — This fund has a value tilt and will invest globally – including in emerging markets – in large to mega-cap stocks. The team of managers on this fund pay close attention to risk, and their focus on dividend growth should give investors a growing income stream.

M&G Global Dividend — Manager Stuart Rhodes has an excellent long-term track record. Whilst typically not providing the highest yield, this fund offers diversification, a rising income stream and excellent total returns for investors.

Murray International Trust — This is a genuinely international portfolio. The managers’ style has meant that returns have been very strong in some years and weaker in others, but the trust has delivered in the long run. As a result, it may suit investors who have a long-term investment horizon.

TM Redwheel Global Equity Income — The contrarian nature of this fund means it’s often different from its peers in construction. The fund will be broadly diversified across sectors but could be materially underweight or completely omit a number of sectors if they are deemed unattractive.

Strategies for long-term portfolio growth

There are strategies that can be employed with global equity income funds to help generate long-term portfolio growth. The first is by using them as core holdings at the heart of your portfolio. The idea is you’ll be investing in solid, reliable and profitable businesses. You’ll also have the aforementioned international exposure, which means your portfolio will be more diversified and less susceptible to problems within individual markets.

Read more: Three different approaches to portfolio construction

The next is a term we have briefly touched upon: compounding. This refers to the creation of wealth by earning a return on interest/income already received. Let’s illustrate this with a simple example. An investor starts with £200 and at the end of the year has earned 5% interest/income. They will have made £10 and now have £210. The second year, instead of generating £10, they earn £10.50 off the £210, bringing the total to £220.50, and so on and so forth. As far as global equity income funds are concerned, compounding refers to automatically reinvesting the dividends into buying more fund units (if you’ve purchased an accumulation share class). More broadly, helping to make your income resilient to inflation is another longer-term strategy that’s appealing to investors concerned about the rising costs of living.

You can learn more about the difference between accumulation and income share classes in our free Demystifying Investments course.

FAQs

• What is a global equity income fund?
  A global equity income fund invests in companies around the world that pay consistent and (hopefully) growing dividends. These funds also have the potential for capital gains.
• How do global equity income funds differ from dividend funds?
  These terms can often be used interchangeably as global equity income funds invest in shares of companies from around the world that pay a dividend. These are income-focused funds but are still looking for quality growth globally. Dividend funds are simply a broader term for funds that invest in companies paying a dividend. They can be global, regional or even sector-specific in nature.
• Are global equity income funds suitable for long-term investors?
  Yes, they can be suitable for long-term investors. The companies in which these portfolios invest will usually be reliable, stable and profitable.
• What are the main risks associated with global equity income funds?
  They are susceptible to the usual risks of investing: market volatility, economic problems around the world, and decisions taken by the fund managers.
• How can I choose the best global equity income fund?
  You need to look at the fund’s aims and objectives, the track record of the management team at the helm, and the level of charges. FundCalibre is an excellent resource when researching funds.

Conclusion

Global equity income funds are worth considering for most investors, whether they’re wanting an extra source of revenue or longer-term capital growth. There are plenty of experienced, successful managers in this area of the market and the companies they invest in will be among the world’s best-run and most profitable. However, you need to accept that no funds are guaranteed to make you money. You must also ensure they meet your overall investment objectives and attitude to risk.

*Source: Janus Henderson Global Dividend Index, March 2025
**Source: FE Analytics, total returns in pounds sterling, IA Global Equity Income Sector, calendar year 2024
***Source: FE Analytics, discrete calendar returns in pounds sterling, 2015 to 2025
****Source: IA full sector data, March 2025
^Source: FE Analytics, total returns in pounds sterling, data at 9 April 2025