Recovery likely to be slow

Pace of recovery will benefit corporate bond investors, according to Aberdeen's Paul Reed

Paul Reed, manager of the Aberdeen Fixed Interest fund, believes the likely economic scenario over the medium term is of a slow, steady recovery beneficial to corporate bond investors. As economic sentiment improves, however, gilts will weaken as investors move into high grade corporate debt, he said. 'The main risk to investing in corporate bonds is another severe downturn in the economy, caused by either sluggish corporate earnings or geopolitical events,' Reed said. 'Many issues are linked to cyclical sectors that would encounter problems in such a scenario.' Care should be taken...