Constructive background for bonds

Fund manager's comment

Last year was generally good for sterling bond investors, especially those with exposure to corporat...

Last year was generally good for sterling bond investors, especially those with exposure to corporate bonds. For example, the Merrill Lynch Sterling Corporate Bond Index showed a total return of 7.8% for the 12 months to 6 April 2004, compared to the group's index of UK Gilts, which returned 2.8%. The story of sterling debt is similar to that played out in many economies. Intervention by central banks since 2001 reduced interest rates and increased liquidity worldwide to stimulate demand. This activity compelled investors to seek returns outside their more traditional asset classes. For bo...