Five fixed income funds to protect you from a further sell-off

Laura Dew

Last year was brutal for many fixed income investors as talk of tapering in the US and the great rotation to equities pushed up core bond yields. But which portfolios protected investors regardless - and could do so again this year?

As yields on gilts and treasuries climbed sharply, fixed income investors were left facing losses, with the average gilt fund losing 3.6% in the last 12 months (to 3 January, according to Morningstar). Emerging market debt investors suffered the most as the sell-off in core bonds was exacerbated by other dollar-pegged currencies, with the average EM debt fund losing 10.5%. This year could be broadly similar if the economic recovery maintains its momentum, with talk of interest rate rises likely to continue, and the start of a winding-up of QE in some countries - in particular the US -...

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