Spreads wider but bonds perform well

Fund manager"s comment

Credit spreads over government bonds have widened since the beginning of 2004. Following one of the ...

Credit spreads over government bonds have widened since the beginning of 2004. Following one of the best years, in terms of performance in 2003, valuations of investment grade corporate bonds had reached overstretched levels. Uncertainty about how much further the rally had to go prompted investors to adopt a more risk-averse approach. This involved reducing exposure to some of the more expensive areas of the market and locking in some of the gains from the previous year. Spreads widened and market volatility increased, as trading volumes dried up on the back of this increased uncertain...