This year's surprising top performing bond indices

After just passing the halfway mark of 2010, M&G's bond team has found performance in fixed interest markets this year has not necessarily reflected the amount of credit risk an investor is willing to take.

Using BofA Merrill Lynch data, M&G has compiled a table of the top performing bond indices of 2010, to 13 July. AAA rated index-linked gilts have provided a total return of just over 3%, while gilts have climbed 5.5%, outperforming higher-risk areas such as sterling tier 1 and euro upper tier 2 debt. The financial indices suffered as risk aversion increased on concerns over exposure to peripheral sovereign debt. Star performers year-to-date are the corporate indices, particularly high yield, with Europe and the UK returning 7.11% and 15.73% respectively. The Sterling High Yield ...