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The new vehicle, which was launched last week, will invest in European equities with a dividend yield bias and aim to combine capital growth with dividend income to outperform the FTSE World Europe index, as well as other European equity income funds.

The fund hopes to achieve this by exploiting the market’s misvaluation of high dividend-yielding stocks and investing in quality companies that can grow their dividends, but are undervalued by the market.

It will also invest in historically low-quality companies for which the market has not yet re-valued an improvement in returns.

The fund will have a minimum investment of £500 and be run by Richard Halle, who will adopt a bottom-up stock picking approach, with the portfolio holding between 40-60 stocks.

It will aim to generate a dividend yield of at least 110 per cent of the FTSE World Europe index yield and increase annual dividends at least in line with the market over the long term.

The new fund comes hot on the heels of the recently launched M&G Global Dividend fund, managed by Stuart Rhodes.

Jonathan Willcocks, managing director of global sales at M&G, said: "UK investors have become massively overexposed to the UK equity income story, and with the launch of the Pan European and Global dividend funds, this gives them a chance to diversify, but with an increasing yield."

Mr Willcocks added that many investors were unaware that 92 per cent of stocks yielding more than 3 per cent were actually found outside the UK.

Fund Facts

Initial commission: 3 per cent

Trail commission: 0.5 per cent

AMC: 1.5 per cent