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Funds Centre

Performances as at: 20/06/2008

Wednesday April 30, 12:00 AM

Investors flock to corporate bonds

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Recent data from the Investment Management Association shows that the UK Corporate Bond sector is currently the most popular with investors. Funds in the sector saw net sales (purchases minus redemptions) of £347 million during March.

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of the reason why the Corporate Bond sector is currently so popular must surely be the high yields on offer. Financial institutions, desperate to get cash on their balance sheets to weather the credit crunch, have been forced sellers of bonds. This glut coming onto the market has driven prices down significantly, which in turn has caused yields to surge.

Bonds are certainly not a one-way bet, since any investment can fall in value as well as rise, and if inflation continues to rise that will work against bonds. On balance, however, we believe the prospects for bonds over the next few years are strong.

Other top-selling sectors in March included Global Growth (net inflows of £277m) and North American (net inflows of £227m).
 

Fund research is provided by Hargreaves Lansdown. Hargreaves Lansdown is an independent broker offering unit trust, stockbroking and other pension and investment services. No news or research item is a personal recommendation to deal.