Pensions prefer corporates to gilts

High-yielding bonds look set to outperform investment grade bonds, which in turn should do better th...

High-yielding bonds look set to outperform investment grade bonds, which in turn should do better than government bonds this year. Rate cuts in 2001 have given rise to expectations of stronger growth, which threatens government bond yields. My fund is positioned with roughly 70% in investment grade bonds and 30% in non-investment grade bonds. I believe this structure offers a degree of capital preservation combined with some stability of returns. Research shows that augmenting investment grade bonds with non-investment grade bonds can actually reduce total portfolio risk because of the ...