Changes in sentiment creating opportunities

We are nervous of investment grade bonds as they provide little extra yield for the added credit ris...

We are nervous of investment grade bonds as they provide little extra yield for the added credit risk. We have generally reduced risk by switching from corporate bonds into gilts, especially short-dated ones, and floating rate paper. But we remain positive on sub-investment grade bonds at least for the next few months. With a benign economic environment and a yield advantage over investment grade bonds, the extra risk taken seems worthwhile. But by the end of the year we will probably have reduced our exposure to sub-investment grade bonds quite significantly. Within equities we remain...