Should we seek alternatives to the corporate bond sector?

Mark Holman, Managing partner at TwentyFour Asset Management.

A lot has been written about corporate bonds of late, so we thought we would add our own view to the mix. Starting with some top-down analysis, a quick look at the Sterling Corporate Bond index tells us that the yield is now just 3.97%. To get that we have to be exposed to a portfolio of bonds with an average maturity of over 12 years, with a weighted average rating of single A. Just 12 months ago the yield on the same index was 5.66%. So clearly the powerful rally, combined with record low absolute yields, is what is driving the commentary on the ‘overvaluation’ for the sector. If...