Mixed outlook for gilts over next year

Fund manager's comment

Overall, I think credit will outperform gilts over the next year, but I'm aware that PS04/16 will im...

Overall, I think credit will outperform gilts over the next year, but I'm aware that PS04/16 will impact most of the holders of sterling credit, and its effect is difficult to quantify. I suspect we are yet to see the full impact of CP195 and PS04/16, the regulatory solvency test for life companies' corporate bond holdings. Companies have to report on their compliance with this standard at the end of this year. FSA returns indicate that the insurance industry in aggregate owns over two-thirds of the sterling investment grade market and it is not clear whether each life assurer has alrea...