Duration, duration, duration: Why some investors will be disappointed with their strategic bond funds

A multi-faceted universe of funds

There are clear reasons why strategic bonds funds have not participated in the 'duration party' of recent years. But, asks The Adviser Centre's head of investment research Gill Hutchison, shouldn't investors expect them to be, well, more strategic?

Judged by relative performance alone, investors could be forgiven for feeling a little disappointed with their strategic bond funds. Over one, three and five years, the sector average performance is behind that of both the Sterling Corporate Bond and UK Gilts sectors. And while it is closer to the average return of the Sterling High Yield sector, it still lags over five years (source: Investment Week/Morningstar, to 09/09/16). What are the challenges for bond investors as hunt for yield pushed them into riskier areas? Is this purely returns-based disappointment fair? On the basis o...