Porter, manager of the Martin Currie Global Equity Income fund, says that the 10 highest yielders in the global market make up a far smaller proportion of the investable universe than the top-heavy UK market.
However, the money keeps pouring into the UK sector, and the manager says that investors need to diversify out of the country to avoid creating an unbalanced portfolio.
"The UK equity income space is still growing, which I am astonished about. When you have such diverse quality, why on earth don’t investors look to the benefit of choice you can get from a more global sector?"
"The UK market is very concentrated. I do hold 15 per cent of the fund in the UK, however it shows that I can find 85 per cent of other opportunities around the world."
"Yes, the UK is one of the highest-yielding markets, but there is relatively limited choice available and huge concentration of income."
"The top-10 highest dividend-yielders in the UK market account for around 50 to 55 per cent of all dividends paid out."
"However, in the global sector the top-10 only account for 18 per cent. Plus, there is also a huge overlap in UK funds' top-10 holdings," he added.
Although many of the funds in the IMA Global Equity Income sector have been launched recently – 10 out of 30 of the funds have been opened since 2011 – Porter says this is not a passing fashion, as diversification demands investors look beyond the UK equity income sector.
"I’ve been saying to my clients that you can’t view global equity income as a passing fad," he said.
Porter’s thoughts are echoed by the likes of FE Alpha Manager John McClure – manager of the five crown-rated Unicorn UK Income fund – who says the majority of UK equity income funds are trackers but with higher charges.
Porter has been running the £106m Martin Currie Global Equity Income fund since its launch in November 2010.
According to FE Analytics, the fund has returned 34.4 per cent while the IMA Global Equity Income sector has made 30.71 per cent.
Performance of fund vs sector since Nov 2010
Source: FE Analytics
The fund has a yield of 3.23 per cent, which it gets from companies listed in the US, UK, developed Europe and the emerging markets.
Porter has a very bottom-up stockpicking approach to investing, with a focus on companies that can deliver both dividend growth and capital appreciation.
To highlight the opportunities open to investors who take a more global view of the equity income market, Porter told FE Trustnet about three of his most recent acquisitions.
Modern Times Group
Porter has recently bought Swedish media company Modern Times Group (MGT).
"MGT is a television broadcasting group, basically the BSkyB of Scandinavia as it focuses on both free and pay TV," he said.
"There is a huge amount of leverage you can get from MTG because it has bought all its content for the next three years and has sorted out all its advertising sales and will continue to see customer subscriptions."
"It has a dividend yield of 4 per cent at the moment, but we expect that to increase around 8 per cent a year, and it has a P/E ratio of 13.5."
"The company doesn’t only focus on the Nordic countries, it has interests in emerging Europe, with channels in Ukraine and the Baltic states," he added.
Eutelsat
The manager has also recently bought the French-based satellite company Eutelsat.
"Eutelsat is in a similar mould to Modern Times Group, however while MGT is a provider of satellite TV channels, Eutelsat delivers channels through its satellites. It has over 4,500 satellites in orbit," he said.
"Their earnings growth is being driven by HD channels, which are quite difficult to provide without using satellites."
"The stock has a dividend yield of 4 per cent, but we also expect that to increase by 10 per cent over the next three years."
"It has a P/E ratio of 17 and we are playing the fact that, even in difficult times, people are willing to pay for their home entertainment."
BNP Paribas
As Porter does not take a macro view on the markets, he says it is possible to find a number of hidden gems by taking a bottom-up approach to investing.
One of these is the French bank BNP Paribas.
"Although BNP Paribas is a quality bank and has paid out a dividend to its shareholders all through the financial crisis, we believe that it has been unfairly lumped together with low-quality European banks," he said.
"Over the last few years it has been massively deleveraging its balance sheet and it is way ahead of schedule in terms of the Basel III agreement."
"It currently has a dividend yield of 4.1 per cent and has 8.5x forward earnings. As a cyclical stock, we expect that mid-term dividend per share growth will increase by a large percentage; we think it will normalise over the long-term," he added.
Our data shows that 33 funds hold BNP Paribas in their top-10.
These include FE Alpha Manager Stuart Mitchell’s SJP Continental European, the five crown-rated Invesco Perpetual European Opportunities and the five crown-rated Schroder European Alpha Plus, which is headed up by FE Alpha Manager Leon Howard Spink.
Martin Currie Global Equity Income has an ongoing charges figure (OCF) of 1.76 per cent and requires a minimum investment of £1,000.