Should bond investors worry about defaults?
The number of voices predicting a recession are growing. The UK economy contracted in the first...
Earlier this week, the Dow Jones Industrial Average closed above 26,000 for the first time in its 121-year history. It was the index’s best one-day point gain since the day before Donald Trump was elected president and quite a remarkable feat when you consider we are almost nine years into the current bull market.
At this point in the market cycle it can be very easy to get carried away and the fear of missing out can be an overwhelming feeling. But while there seems to be no stopping US exuberance, us Brits are showing far more restraint.
According to the latest figures form the Investment Association* – the trade body that represents UK investment managers – investor confidence in the UK is high, but the best-selling asset class is fixed income (and it has been for the past six months), not equities, with strategic bond funds the best-selling sector.
Mixed Investments – the sectors which hold the multi-asset funds – was the second most popular asset class with equities coming in third place.
Within equities, US equity funds were way down in fourth place in terms of net retail sales, with UK investors preferring Europe, Asia and Japan – perhaps showing an inclination to invest in regions showing better value.
Visitors to FundCalibre.com, who were researching bond funds in 2017, reflected the same behaviour. Seven out of the ten most viewed bond funds last year were in the strategic bond sector**. Schroder High Yield Opportunities, which sits in the high yield bond sector, bucked the trend in fourth place.
|Most viewed bond fund||Percentage of views **|
|1||Invesco Perpetual Monthly Income Plus||16%|
|2||Fidelity Strategic Bond||10.5%|
|3||Jupiter Strategic Bond||7%|
|4||Schroder High Yield Opportunities||7%|
|5||TwentyFour Dynamic Bond||6.5%|
|6||Aviva Investors High Yield Bond||6%|
|7||M&G Optimal Income||5.5%|
|8||Royal London Corporate Bond||5.5%|
|9||Aberdeen Emerging Markets Bond||5%|
|10||M&G Strategic Corporate Bond||5%|
*Investment Association fund flows, November 2017, figures released 11 January 2018
**Based on total bond fund note page views on FundCalibre.com from 1 January 2017 to 31 December 2017