The reasons for investing in such a fund are backed up by research from the Investment Association (IA). It shows that those who left £100,000 “languishing” in cash accounts paying the Bank of England base rate of 0.5 per cent in March 2009 would have gained just £3,500 overall seven years later. But those who put the same sum in the average UK Equity Income sector fund would have a portfolio worth £232,400.

UK equity income yields have declined slightly since 2009, although the trade body argues they have still been a useful source of income in retirement.

Guy Sears, interim chief executive at the IA, observes: “Even without any investment growth, the yields reported by funds targeting income-paying stocks have rewarded investors far better than the Bank of England’s 0.5 per cent base rate.”

At the start of this year, income was in demand as global markets went through a prolonged period of uncertainty. According to IA figures, in February retail investors favoured income funds, specifically equity income products. The IA UK Equity Income sector was the second bestselling sector in the month, clocking up net retail sales of £214m.

Speaking at a Kames Capital income investment briefing in March, director of wholesale Steve Kenny explains why he believes demand for income will not go away this year. “I still don’t think the money that has gone out of the market in terms of the annuity pension freedoms has started to arrive in the mutual fund market,” he says.

Ahead of the launch of its Property Income and Diversified Income funds, Kames Capital carried out research on the income clients seek: “The magic number we got back from our research was people are looking for around 5 per cent in terms of income as an option. The thing they want is monthly, and the other thing they want is dependability.” This explains the products that have come to market in recent years offering 4 or 5 per cent yields.

Another reason for the popularity of income yielding funds is that fixed income is no longer a reliable source of income. David Goldman, co-manager of the BlackRock UK Income fund, says: “With interest rates at extremely low levels, limited inflation and substantial quantitative easing from central banks, the income available from assets typically found in traditional savings/retirement plans, such as government and corporate bonds, has fallen sharply over the past few years. More than $7trn (£4.9trn) of government bonds currently offer negative yields, while 10-year UK gilts yield just 1.4 per cent. This is also impacting the income available from corporate bonds.”

He adds: “Property, another traditional source of income for UK savers, is also challenged, given increasing regulation aimed at cooling the buy-to-let market.”

This leaves equities, he says. With the dividend yield on the FTSE All-Share index at 3.8 per cent, the attraction for income seekers is understandable. But Mr Kenny warns that the popularity of UK equity income funds is waning as investors favour global equity income products. “People took such a battering in 2008 when banks cut their dividends that I think in the UK, because of the concentration of [dividends], it’s a higher-risk market to have all your equity income monies in one basket.

“Global equity income has become a slightly more popular vehicle for that diversification and quite rightly so, from a risk perspective requirement. I think it’s also one of the reasons we’ve seen groups launch multi-asset [products] and try and blend a raft of assets with different characteristics to give somebody an income stream that is hopefully more dependable.”

Ellie Duncan is deputy features editor at Investment Adviser