When it comes to generating income, British investors have traditionally stayed at home. It has been a strategy that has well and truly paid dividends. According to the Barclays Capital Equity Gilt Study 2007,  £100 invested in equities at the end of 1899 would now be worth just £213 in real terms without the reinvestment of dividend income, while with reinvestment the £100 would have grown to £25,022.

That is why UK equity income funds have always been worth considering as they aim to deliver both capital growth and a growing income stream, which can be reinvested - an objective they have been able to achieve as a result of UK companies long history of paying decent dividends.

Historically UK companies have outshone their overseas counterparts on generating dividends, but that might be about to change. Yields in the UK have edged lower as the stock market has risen and as a result, many traditional equity income funds are struggling to hit the income target set by the Investment Management Association, which is 110% of the yield on the FTSE All-Share Index.

In comparison, the income from some shares in Europe and Asia is looking increasingly attractive. Though many markets are still yielding less than the UK, dividends are growing at a faster rate overseas - at a year-on-year rate of 15.8% in Europe and 19.6% in Asia, compared with 11.4% in Britain, according to investment bank UBS.

Historically, the distribution of dividends has not been a feature of overseas funds for a number of reasons including taxation problems and cultural perceptions - but this has changed markedly over the past two years. As markets across the globe have matured, an increasing number of companies have followed the UK trend towards dividends.

In Asia, for example, companies have recovered from a severe economic crisis and have improved their corporate governance. Many with cash on their balance sheets are returning this surplus cash to investors via dividends. This is a feature of Japan's corporate landscape too, while in Europe analysts say there is room to increase payout ratios from 40%.

A handful of fund management groups are capitalising on the change in circumstances and have launched international equity income funds as a result. There are now European, Asian, North American and Japan equity and generic global equity income funds available to private investors.

Financial advisers are also beginning to take an interest in these overseas fund offerings their clients. They reckon that if a 'dividend culture' takes hold in other parts of the world in the way it has in Britain, high-yield stocks could be re-rated, producing attractive returns, particularly for earlybird investors.

But while advisers are generally supportive of this emerging sector many also agree that investors should understand the additional risks associated with equity income funds investing overseas.

Firstly, there is currency risk. Dividends paid in local currency must be converted to sterling before they can be distributed from a fund to British investors. This is good news if foreign currencies strengthen against the pound, but weakening currencies will shrink the dividends that investors in Britain ultimately receive when converted to sterling. What's more, many overseas markets have a reputation for cutting dividends during more difficult economic conditions.

Secondly, overseas equity income funds can be heavily invested in one or two sectors such as property, telecoms and financials, and commitments to dividend policies may vary widely. In Europe, for instance, commitments differ greatly between companies: France Telecom has no stated dividend policy but others, such as Société Générale do. If a sector struggles, the impact on both income and fund value could be significant.

Although rising dividends are a well established concept in the UK, the trend is still relatively new in other regions, especially Asia. Whether companies remain committed, or sufficiently robust, to continue paying rising dividends in the long term remains to be seen. Many are in a strong position to raise dividends in the short term, but it is worth remembering that this trend remains untested during a severe global economic slowdown.

The rationale for UK equity income funds remains firmly in place. If you want to tap into the benefits, then income funds focusing on the UK should probably be your first port of call. These funds have rarely let investors down - the average UK equity income fund has produced positive returns in 16 of the past 20 years - and the sector is blessed with a number of wise, experienced fund managers who have consistently delivered the goods.

Yet there is no doubt that because UK equity income funds have proved so popular, many investors may already own enough of them. To bring some diversification to their portfolios, investors may consider going global for income as an interesting new option.

It is worth remembering that the new 'sector' of international income funds is in its infancy and funds investing in emerging markets, such as Asia, are likely to be more volatile than those investing in Western markets. As a result, they are unlikely to mirror the defensive nature of UK, or perhaps European, equity income funds.

That said, the new breed of funds could offer seasoned investors useful diversification and the opportunity to generate income, rather than just the potential for capital growth, when investing in overseas funds. But the golden rule stands; get expert advice before taking the plunge.

Past performance should not be seen as a guide to future performance. The value of and investment and the income from it can go down as well as up, and may be affected by exchange rate fluctuations.