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Having deleveraged balanced sheets and refinanced themselves on favourable terms, corporates look to be in a healthy state. But slow growth in Europe means investors should favour those with a global reach
However, it is important to address discrepancies within the corporate bond market across countries through a maturity schedule.
Rather than dealing in asset classes, investors should be thinking in terms of categories of risk to protect their portfolios
The safe but unspectacular yields from higher grade corporate bonds continue to attract those looking for defensive investments, but the more adventurous are turning to the generous returns offered by lower grade issuers
Many funds with high allocations to bonds may not be as balanced as their name suggests, and investors need to be aware of the risks
Most commentators believe that high yield bonds offer significant opportunities to investors as they have priced in a worst-case scenario that is unlikely to occur
Worries over the state of the dollar and the euro have seen increasing levels of interest in local currencies in emerging markets
The all time highs enjoyed by corporate bonds over the past couple of years may be over, but the sector still offers attractive yield-based returns
Flows into high yield bonds remain steady as the asset class continues to appeal to investors attracted by improved corporate fundamentals and the promise of low default rates. Ceri Jones reports.
Flows into emerging market debt have been steadily increasing,writes Ceri Jones, with institutional investors in particular attracted by strong economic fundamentals and the reduced levels of volatility that bonds offer over equities.
Asset allocation is about controlling the risk added to the portfolio by each of its components.
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