Credit crunch bites into the 'safe haven' value of corporate bonds

Average funds posting losses of -14.34% over three years as peer group demand drives spreads to unattractive levels

The reputation of corporate bond funds as a relative safe haven from the volatility of the stock market has taken a beating over the past three years. The ravages of the credit crunch have seen millions of pounds wiped off the value of UK fixed income funds. In the Investment Management Association's £ Corporate Bond sector, only eight of the 81 funds have delivered positive returns over the three years to 20 February and not one proved able to keep pace with cash. The average fund posted a loss of -14.34%, according to Morningstar data, but the disparity of returns has been marked wi...