The recent turbulence in the gilt market has emphasised the importance of investors being well diversified across their fixed income holdings.
UK government bonds have been one of the most volatile asset classes of 2015 so far, delivering an annualised volatility of 11% and a max drawdown of almost 6%. The average IA Sterling Strategic Bond fund, by comparison, has volatility of 2.4% and a drawdown of 0.6% year to date. It is little surprise the bulk of money flowing into bond funds in recent months has gone into IA Sterling Strategic Bond. Richard Woolnough's M&G Optimal Income portfolio has been the standout beneficiary. FE data shows the fund has attracted more than £3bn in the last 12 months alone, pushing total AUM abo...
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