Risks of eurozone debt outweigh rewards

ON BONDS

In this precarious environment, with equity markets proving highly volatile and interest rates sitting at historic lows, fixed interest securities are of clear appeal to investors.

That is not to say all bonds look attractive. To my mind the risk associated with sovereign and corporate debt in troubled eurozone states such as Italy and Portugal still outweighs the rewards, despite the elevated yields. Undoubtedly the turmoil in the eurozone will in time reach a point where it presents attractive opportunities for nimble investors, but for me that day has not yet arrived. There is still too much uncertainty about what the wider effects of sovereign default will be. For the time being, my approach is to focus primarily on the corporate bonds of companies in the US...