Current protection for bank bondholders is likely to be abolished by regulators as part of reforms to the financial sector, M&G warns.
Schroders' Nick Gartside has switched from inflation-linked to nominal US treasuries in his £316.7m Strategic Bond fund as the market continues to be "fixated on deflation".
Investec's John Stopford believes UK index-linked gilts continue to offer good value after the DMO raised £6bn in a sale of the securities yesterday.
The Bank of England has made a £5.5bn full-year loss on the assets bought under its quantitative easing (QE) programme to prop up the battered UK economy.
Bond managers have largely dismissed Friday's highly-anticipated European bank stress tests as a non-event, with the markets similarly showing a muted response in early trading.
Energy bonds lead corporate debt returns this month after receiving a boost from BP temporarily sealing the leaking Macondo oil well.
Widespread chaos has been predicted in the bond markets as the world's three largest ratings agencies said their ratings could not be used in any marketing material.