Strategic Bond sector mimics equities as FTSE correlation rises

The IMA £ Strategic Bond sector was more closely correlated than UK small-cap funds to the FTSE 100 last year, data has revealed.

Statistics from Lipper produced for Investment Week show the sector had a correlation coefficient with the FTSE of 0.84 in 2011, well above the three-year figure of 0.66 and higher than the 0.83 correlation seen in 2008 at the height of the financial crisis. That compares with a correlation of 0.81 for the IMA UK Smaller Companies sector and 0.84 for the North America sector in 2011. By contrast, the UK Gilt sector had a correlation of -0.31 last year. But with government bonds seen as fully valued, 2011 saw many strategic bond managers up credit weightings. Attractive spreads pr...