Bonds start to look more attractive

There has apparently seldom been a better backdrop for bond markets than that seen in the early part...

There has apparently seldom been a better backdrop for bond markets than that seen in the early part of 2002. FRS17 is being phased in and, along with poor recent investment returns, this has hastened the demise of final salary pension schemes and boosted the attractions of bonds. Fixed income markets have enjoyed an unusual winning streak against equities. The cumulative two-year underperformance of equities against gilts of 35.5% was the worst since 1973/74. However, there are reasons to believe that the near-term outlook for bonds will be more challenging. The main driver of bond m...