Moore (pictured) says liquidity injections and bond-buying plans are forcing investors further up the risk scale, which in his opinion is the right move. "People need income because inflation is running at a certain level and government bonds are running way below inflation," said Moore, who heads up the £100m Standard Like UK Equity Income Unconstrained fund.
"Cash and government bonds are becoming less and less attractive. There are big risks on the capital side – although we’ve had a bull market in government bonds for several years, there is a risk that at some point they will crack."
"If people start to view them as relatively risky, this would result in a massive change in sentiment."
Moore says corporate bonds are the first place investors have gone to seek higher yields, but he believes the tide is now turning in favour of equity income.
He commented: "Corporate bonds have provided better income but they’ve also rallied very strongly so the yields aren’t as attractive as they were two years ago."
"At the same time, government bonds are part of the overall return that you get from corporate bonds, so if government bonds do crack at some point then you have got capital risk as well."
He adds that the coupons of corporate bonds are fixed, unlike equity dividends which can increase each year.
However, the manager admits that those looking into equities as a source of income need to be prepared to take a few jolts before the asset class comes roaring back.
"There’s a thirst for yield stocks in the market," he said. "There’s an inherent discipline in managing an income fund which forces you to look at situations that are unloved."
"I think the QE situation fits together very neatly with what investors are seeing because QE is forcing investors to move up the risk curve."
However, Moore says the injection of liquidity and capital into the market has led to a wash of corporate bond issuance – a good sign for investors.
"That’s where financial markets meet main street, the real world, because you’ve got significant corporate bond issuance, which is a visible benefit of QE, which means that companies are gaining access to finance and benefiting the real economy," he said.
"The beauty of the situation at the moment is that policy action is working – monetary policy is beginning to take hold. We’re seeing it in equity markets because people are beginning to inch back into equity markets, but the real economy will benefit as well."
"What’s exciting for me as I look into 2013 is I can see how policy action is transmitting into the real economy and the best way to play that is through equities."
Standard Life UK Equity Income Unconstrained has been a top-quartile performer since Moore took over in 2009.
It has delivered 36.99 per cent over three years, while the IMA UK Equity Income sector has returned 28.62 per cent.
Performance of fund vs sector over 3-yrs
Source: FE Analytics
It has, however, been more volatile.
Moore has a significant mid cap bias, with more than half of his assets in the FTSE 250.
Financials are the manager’s biggest sector position [35.2 per cent]. L&G Group and F&C Asset Management are both top-10 holdings.
The fund is currently second quartile in terms of yield, at 4.36 per cent. The highest-yielding fund in the sector is Insight UK Equity Income Booster, which pays 8.56 per cent, according to FE Analytics.
It has a minimum investment of £1,000 and a total expense ratio (TER) of 1.91 per cent.