Moore, who heads the £98.8m Standard Life Investments UK Equity Income Unconstrained fund, believes investors will have a rude awakening if they keep expecting special dividends from certain blue chips. "I think we are very close to a tipping point, if we haven’t already reached it, in traditional income stocks," he said.
"Investors need to be aware that in order to gain income from their portfolio, they need to be more diversified in their investment strategy. It is clear to see that across the majority of top income funds, they hold very similar holdings."
"The change in the major income stocks is seen at the margin; it is clearer they are facing challenges from the lack of growth in their underlying business."
Moore’s comments follow falls in the value of Vodafone and GlaxoSmithKline's share prices over the past few weeks.
The manager highlights Vodafone’s poor market results compared with last year as evidence of a bubble among this extremely popular stock.
"Vodafone offered a 4p special dividend last year, this time around there isn’t one. To cover this they will adopt a share buy-back scheme."
"Vodafone’s cash distribution is lower than we have previously seen and it shows that they are uncomfortable with distributing too many dividends."
"This reduced pay-out indicates that they don’t have confidence in their earnings."
Moore also thinks that the case of AstraZeneca, another stock popular with income portfolios, strengthens his "bubble" argument. The global pharmaceutical giant recently shelved its share buy-back scheme in order to provide it with more strategic flexibility.
He added: "I think what we have seen is that an over-reliance on a limited number of stocks is very dangerous; hopefully the penny is finally starting to drop."
FE Analytics data shows Moore has beaten his competitors over his career in fund management, returning 89.86 per cent while his peer group composite has delivered 54.37 per cent.
Performance of manager vs peer group composite
Source: FE Analytics
Moore says investors who want to avoid the problems associated with equity income need to look further down the market cap spectrum.
"There is a lack of originality across the top income funds. Our unconstrained fund is biased towards the mid cap, with only 32 per cent of the fund in the FTSE 100, while the average is 85 per cent."
"This means we avoid slow-growth companies that have already matured. There is no need to have such a narrow approach; a varied selection is the best idea."
Since Moore began running Standard Life Investments UK Equity Income Unconstrained, he has turned its fortunes around.
He took charge in January 2009, since when it has returned 87.79 per cent, beating the IMA UK Equity Income sector which delivered 51.41 per cent over the same period.
Standard Life Investments UK Equity Income Unconstrained is yielding 3.98 per cent and has a total expense ratio (TER) of 1.91 per cent.