The search for income has rarely been more challenging. Many retired investors depend on their savings for income, with many more requiring their savings to work harder for them to build a deposit for a mortgage or provide for a satisfactory pension.

Interest payments on cash in a bank are minimal and are likely to remain low for several years to come.

The other ‘low risk’ option of buying government bonds is not much better. Investors buying 10-year UK Government bonds achieve a yield of only around 0.7 per cent today, which compares with an inflation rate of 0.6 per cent.

Would you really lend money for ten years for a return of 0.7 per cent per annum without any protection against future inflation?

If yields rose to 1.7 per cent, where they were just 12 months ago, this would result in an almost 60 per cent fall in the price of the bond. This does not appear a low-risk option.

The danger for investors in their search for income is that they are drawn into less liquid and higher-risk investments.

Property has long been a favourite asset class, but with increases in stamp duty and poor liquidity restricting redemptions in some collective funds, it is not without risk.

In addition, many investors already have a large investment in their own home and placing all the bets on red might appear imprudent.

The application of more debt to many products, when funded at current low levels, can significantly enhance income. However, this can unwind painfully if returns do not match expectations or funding costs change.

The equity market is an obvious alternative, but it has performed relatively well despite still sluggish economic growth and uncertainty over the impact of Brexit.

The tech bubble of the late 1990s was driven by the over-optimistic exuberance of investors paying crazy prices for dotcom investments, many of which later disappeared without ever returning a profit. The danger today is from investors over-paying for income-generating businesses.

The search for yield has not just driven up bond prices, but has also pushed up share valuations in several sectors, where investors view dividends as particularly safe.

One example is WD40, the ubiquitous manufacturer of light oil for loosening bolts and stopping hinges squeaking. It is found in over 80 per cent of US households, does not have any meaningful competitors and earns a high return on capital.

However, it has found few growth opportunities and, as a result, the company pays out a significant proportion of earnings in dividends.

Five years ago the yield on the shares was over 2.6 per cent but, driven by investors’ appreciation of the security of the dividend, it has now fallen to just under 1.4 per cent. If the yield returned to 2.6 per cent, this would equate to a fall in the share price of almost 50 per cent.

Similarly, a business closer to home such as Reckitt Benckiser, the Slough-based manufacturer of consumer goods brands such as Dettol, Harpic, Nurofen and Vanish, yielded 3.5per cent five years ago but yields just under 2 per cent today.

There are many companies that have experienced a similar share price rerating while their prospects to grow sales, profits and dividends have not significantly improved.

If these bond proxies benefitted from the rally in bonds, it is likely that returns will be hit when valuations return to some form of normality.

It is perhaps an investment truism that you rarely make money when following the herd. Despite the rally in equity markets, there are still many sectors that have been left behind and still offer attractive and secure dividends.

Many of the UK’s largest companies earn the majority of their profits overseas and even pay dividends in US dollars, so currency is a risk that must be considered.

Nevertheless, in an increasingly global economy, this diversification can also offer benefits if held within a diversified portfolio.

Emerging market consumers are increasingly able and willing to spend on healthcare, whereas improving longevity in more affluent economies will underwrite demand. Japan is also flashing up on yield screens for the first time in many years.

Similarly, there are pockets of value in some well-capitalised financial sectors and in more cyclical businesses that will eventually benefit from the gradual improvement in investor confidence and the eventual pick-up in global economic growth.

Graham Campbell is chief executive of Saracen Fund Managers