In comparison, well more than half of investment-grade short-, intermediate- and long-term corporate bond funds
plus global income funds outperformed their benchmarks over three and five years.
There are also worries about the potential impact on mainstream corporate bond funds
, partly because they also tend to be quite long duration but also because the corporate debt market can be illiquid and this could exacerbate price losses if rates had to go up.
The advertisements you have seen are for corporate bond funds
Schroders is pleased to announce the launch of Schroder ISF EURO Credit Conviction, a new fund which aims to achieve a higher yield than core euro corporate bond funds
by focusing on the best ideas generated by the Schroders European and UK credit team s proven investment approach.
CORPORATE BOND FUNDS CORPORATE BOND FUNDS
THESE are professionally managed funds which buys a large number of individual bonds so that you don't encounter the same risks as with retail corporate bonds.
Duration funds such as income funds do not take credit risk but carry high duration risk, while credit funds such as corporate bond funds
are high on credit risk but maintain a tight duration of, say, two to three years," says Pandya.
So corporate bond funds
could provide a lot of protection as the stock market falls, and then from the lows we can switch into 'cheap' stock market-linked funds.
For this reason, many who were formerly risk-averse and seldom wandered far from Building Society term deposits with their nest eggs have resorted to Corporate Bond Funds
and direct Equities (company shares) to obtain attractive income levels.
Several corporate bond funds
will hold only bonds which satisfy an ethical screening - including the F&C Ethical Bond Fund, up 22.
5-5% per year is more realistic from corporate bond funds
now plus, perhaps, another 1% or so for capital growth.
So, perhaps taking those profits from government bond funds and reallocating them to corporate bond funds
might prove profitable.
Investors who are seeking income but concerned about the volatility of investing in shares may find that corporate bond funds
provide the answer.