Gilts can continue their strength

ON BONDS

BEN LORD, manager of the M&G High Interest fund on Bonds

We were reasonably bullish on fixed income coming into 2010. But did we expect by the middle of August gilts would have returned 6.5% and sterling corporates would have returned 9.2%? Absolutely not. Before this crisis in 2006 and early 2007 you could put your cash on a guaranteed deposit paying you more than 5%, and this was yielding more than an investment in sterling investment grade credit. Today, deposit yields are negligible, while sterling investment grade credit yields approximately 5%. So the reverse is true, and the asset class looks attractive. Clearly, the concern is eithe...