Do not dismiss financial sector debt

ON BONDS

With economic uncertainty buffeting equity markets and interest rates likely to remain low for a long while to come, bonds will continue to play an important role in driving returns for investors.

A bright warning light continues to flash over some, of course. With default looming, few investors will be tempted to buy Greek sovereign debt even when the bonds are, depending on duration, yielding anything from 20% upwards. Where then do the opportunities lie? Non-financial sector corporate bonds currently offer the most appealing balance of risk and reward and should represent the bulk of the portfolio. In very broad terms investment grade 10-year bonds from companies in the UK, the US and the stronger European economies are offering yields of 3.75% to 4.75% which, again speaking...