Investor risk aversion rearing its head

By Anna Lees-Jones, manager of the M&G Corporate Bond Fund Investor aversion to risk, the main t...

By Anna Lees-Jones, manager of the M&G Corporate Bond Fund Investor aversion to risk, the main theme of 2001, has reared its ugly head once more. Investment grade corporate bonds, very much the beneficiaries in recent months of publicity over reports of extensive pension fund switching from equities to bonds, have seen yield spreads generally widen. However, it is all too easy to gets things out of proportion. There have indeed been some high-profile defaults but a rising incidence of default is consistent with the current stage of the credit cycle, when the corporate sector faces ...