The outlook for the eurozone economy looks quite gloomy, but European equity income funds still appear attractive to long-term investors looking for an income stream and capital growth.

A few years ago, equity income funds were mostly invested in the UK where companies have a history of offering at least two dividend payouts per year. But the balance is shifting and, in some cases, the dividend yields now offered by continental European companies are more enticing. Fund houses are rushing to include European income funds in their repertoire of products.