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By Richard Evans
Meanwhile, returns on bond funds have also picked up as a result of turbulence in the credit markets. But Darius McDermott of Chelsea Financial Services reckons that investors are better off keeping their holdings in cash for the moment. "Things are a lot cheaper now but one bond fund manager I spoke to this week says bonds could have a little further to fall. On the whole I would sit on cash for a bit longer. But bonds do have a place in a balanced portfolio and if you are investing for the long term now might be a good time to buy." Among the funds he favours are Cazenove Strategic, which rose by 0.4 per cent in the three months to July 23 and by 4.4 per cent in the past year, and L&G High Income, which fell by 0.1 per cent over the same three months but is up by 7.3 per cent over the past year. "These results are good in the circumstances," says Mr McDermott, who also likes the Artemis Strategic and Henderson Strategic bond funds. "The sector's average figures are a fall of 1.2 per cent over three months and a rise of 3.6 per cent over a year, so these funds have managed to protect investors' money in falling markets and outperform on the upside."
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