Corporate bond funds and international equities are hot classes

When making asset allocation decisions, the temptation is always to opt for markets and funds that are performing well.

With investors recently rediscovering their appetite for risk, they are eager to supplement the meagre returns from government bonds and cash. As a result, the current hot asset classes are corporate bonds and international equities, particularly emerging markets. Corporate bond funds have seen the biggest inflows for the last eight months. Recent figures from the IMA show UK investors ploughed another £533m into corporate bonds funds during July alone. But as we have seen over the last couple of years, the investment environment is constantly changing and last week’s good idea can al...