SECTOR PROFILE
Performance of funds vs sector
Name 1yr (%) 3yr (%) 5yr (%) 10yr (%)
Allianz Strategic Bond |
-17.8 |
-7.5 |
11.4 |
30.2 |
Aegon Strategic Bond |
-10.3 |
-0.1 |
10.8 |
28.5 |
Janus Henderson Strategic Bond |
-14.7 |
-10.7 |
-0.8 |
22.9 |
IA Sterling Strategic Bond |
-6.4 |
-4.4 |
4.1 |
26.1 |
Source : FE Analytics
notes the yields offered by strategic bond funds can vary significantly , with many of the large US funds holding US mortgage-backed securities and Treasuries , which often have lower yields . “ Away from the strategic bond sector , many high-yield funds will typically stay fully invested through the cycle and don ’ t use lower-yielding government bonds to reduce volatility or provide protection to investors ,” he says . “ These funds usually offer higher yields because of this , but are more suited to institutional investors , who have genuinely long-term investment horizons .” In terms of investment opportunities , Walsh says they currently span the fixed income spectrum , and although they are lower yielding , he thinks government bonds should still have a role to play as they provide “ flexibility and protection ”. “ Some of the best opportunities at the moment are to be found in the financial sector , where high-quality banks with strong investment grade ratings are offering yields of 6 to 7 % on senior and Tier 2 debt , with yields over 9 % available further down the capital structure ,” he says . “ In addition , asset-backed securities , which are typically floating rate , meaning the coupon you get paid increases in line with rates , are also incredibly attractive and offer very compelling opportunities .”
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