Bonds prove popular in turbulent markets

An increase in the number of companies shifting their pension funds from equities to bonds has prompted fears that demand may soon outstrip supply, leading to a dilution in the overall quality of bonds available

Boots, the high street chemist caused a stir last year. But it was not a new range of cosmetics or a fantastic product launch. It was not a huge growth in stores or meteoric profits nor an acquisition or merger. Remarkably, it was Boots' decision to move its £2.3bn pension fund from equities into bonds. The move was not entirely surprising ' bonds had been offering improving returns since the summer of 2000, at a time when equity markets were hit by post dot.com uncertainty and atypical world events. In particular, investment grade corporate bonds (rated BBB or above) have outperformed g...