Pessimism about bonds unjustified

The bond bears are wrong - low inflation means excellent real returns from fixed-income, and there seems to be no end in sight to the huge growth of recent years

Since taking root in the early 1990s the growth of the UK corporate bond market has been rapid. As at the end of 2003, the market value of outstanding sterling non-gilt debt was more than £289bn, some £50bn more than the value of UK gilts outstanding. Inevitably, this magnitude of growth has been matched by a significant increase in the number of mutual funds in the market. M&G launched the first retail ('pure") corporate bond fund as recently as 1994, and there are now 86 different funds in the IMA UK corporate bond sector, and a further 53 in the UK other bond sector. But it is not s...