Gilts look set to attain more lustre

Fund manager's comment

The strong performance of corporate bonds in recent years has caused a lot of comment, suggesting th...

The strong performance of corporate bonds in recent years has caused a lot of comment, suggesting the asset class is becoming too expensive. But, as yields in general move up ahead of last week's rate rise from the Bank of England, we are within striking distance of levels where corporate bonds will be extremely attractive, low risk investments. To demonstrate this, look at the three elements that contribute to corporate-bond returns: the level of bond yields; the level of corporate-bond yields over gilts, the 'credit spread'; and the opportunity to add value through active management. ...