INVESTMENT STRATEGY
R
SECTOLE
PROFI
give, especially around duration,
provides investors with the best
chance of preserving capital.”
Taking the example of duration,
the average of the Strategic Bond
and High Yield sectors is five years,
compared with 12 years for gilts.
If the expected bond sell-off
occurs, the shorter duration funds
will perform best; corporate bond
funds are more limited in their
duration flexibility.
While Hasler notes the Strategic
Bond sector offers something for
everyone, she warns that investors
have to focus on the outcome the
manager is seeking to achieve rather
than the underlying investments in
the fund.
“Funds will vary in the level
and type of risk they present and
investors should bear this in mind,”
she says.
The Strategic Bond sector
has performed similarly to the
Corporate Bond and High Yield Bond
sectors over three and five years,
returning 21.6 per cent and 35.1 per
cent respectively. Just two of the 71
funds in the sector have lost money
over one year, while the average
fund made 6.1 per cent.
IF THE EXPECTED
BOND SELL-OFF
OCCURS, THE SHORTER
DURATION FUNDS WILL
PERFORM BEST
GILTS AND INDEX
LINKED GILTS
Gilts were traditionally regarded
as low risk investments. However,
low yields, record low interest
rates and a considerable amount
Performance over 3yrs
30%
BlackRock - Corporate Bond (26.61%)
25%
IA Sterling Corporate Bond (24.64%)
20%
15%
10%
5%
0%
Jan 15
Oct
Jul
Apr
Jan 14
Oct
Jul
Apr
Jan 13
Oct
Jul
Apr 12
-5%
Source: FE Analytics
18
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