Getting outperformance from corporate bonds

Despite a weakening economic environment, investment grade corporate bonds performed well last year, primarily because of strong demand for credit as a haven from volatile markets

Against a backdrop of a sharply slow-ing global economy, the Bank of England (BoE) participated in the global easing of monetary policy, cutting interest rates by 200 basis points over the course of 2001, leaving base rates at 4%, the lowest level for 40 years. Combined with continued weakness and volatility in equity markets, underpinned by the attraction of gilts, along with other Government bond markets, this offered stability at a time of great uncertainty. Unusually, 2001 was the second consecutive year of positive returns from gilts and negative returns from UK equities, the ext...