UK corporate bonds suffer year of problems

Managers say inflationary pressures, weak credit market and sub-prime concerns have caused UK corporate-bond sector average to fall to -1.8%

The last few months have been tough for UK corporate bonds. A typical fund in the IMA UK Corporate Bond sector lost money over the three months to 30 July, with the peer group average falling to -1.8%. This is in sharp contrast to the lofty double-digit heights of 2004 to 2005, when the sector average was 10.41%. Where did it all go horribly wrong? According to Aegon's Phil Milburn, manager of the Ethical Bond fund, inflationary pressures, a weak credit market and fears over the sub-prime mortgage situation in the US have conspired to stir up trouble in the sector. However, on the plus s...