Increased equity return does not rule out bonds

In spite of improving equity returns, Paul Mingay, manager of the Norwich Union Corporate Bond fund,...

In spite of improving equity returns, Paul Mingay, manager of the Norwich Union Corporate Bond fund, argues there remains a strong case for fixed income. In an environment in which UK interest rates have climbed to 4.5% and are set to rise higher, he says while he expects equities to outperform bonds, the differential in performance will be slight. He adds: "As investors always take surprise badly, the MPC has been careful to flag a gradualist approach to policy formation. This has enabled bond investors to price rate rises into the gilt market and, with much of the potential volatility p...