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The serious risk facing your bond funds 

February 14, 2014
Alex Paget, Trustnet

Bond managers are crowding into the high yield space and putting their investors at risk of a reversal in that sector, according to Hermes’ Fraser Lundie, who says that large parts of it are now overvalued, highly risky and offer very small amounts of upside.

In the current ultra-low interest rate environment and with government bonds and investment grade credit offering next to no real yield, investors have been forced into the higher risk areas of the fixed income market.

This has been a fruitful area for most fixed income investors because higher yielding bonds have been much sought after due to their decent income potential and lower interest rate sensitivity.

Read more: Trustnet

 
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