Bear market full stop puts corporate bonds on road to recovery

With the corporate bond market now recovering, a higher exposure to credit is likely to offer significant potential for maximising returns.

Recent data releases have pointed to an improvement in the economic and corporate outlook, resulting in corporate bonds outperforming government bonds. The fall in interest rates to close to zero has also been positive for corporate bonds. With a dramatic reduction in both the cost of borrowing and the interest paid on deposits, the search for income has led to an increased appetite for risk, with investors moving from cash to higher yielding assets such as corporate bonds. Financials, the single largest sector of the market, have benefited from the return to profitability of a number of...