Collapse of long-dated credit harms funds

Old Mutual's Stephen Snowden has avoided issues by taking neutral duration position and focusing on individual stocks over the last three years

The collapse of the long-dated credit market in 2006 was the big story of the UK Corporate Bond sector over the past three years, having a dramatic effect on the returns of almost every fund operating in the space. Long-dated bond funds dominated the sector in the year to the end of February 2006, according to Morningstar, with the top five funds all focusing on this end of the market. However, those same five funds dropped back to the bottom quartile in the year ending February 2007, as yields and returns fell dramatically on 15-year plus debt. One of the few vehicles that managed to ou...