Bonds fail to live up

absolute returns

The bond market has been difficult for managers hoping to make decent returns in the last year or so. While fixed interest funds were among the first to use investment techniques available under Ucits III, they have yet to shine and many are failing to deliver the goods, claim advisers

The idea behind absolute return bond funds is sound, according to advisers. They give managers more freedom to move across the spectrum from investment grade to high-yield and remove market risk, by using derivatives and short positions to counter the effects of interest rate moves and changes in the credit status of debt issuers. Despite the apparent advantages offered by the new Ucits rules, few absolute return funds have hit the market. Less than a dozen are open to retail investors and while investor emphasis on income generating products is high, consumer and adviser interest has been...