Alliance Trust Investments on how bond funds can still deliver

ON BONDS

There is no question that the UK economy is finally on the road to recovery, a fact that was highlighted in the recent inaugural speech by Mark Carney, new governor of the Bank of England.

However, the future is still fraught with uncertainty and challenges, and this is one of the main reasons why bond funds are still likely to deliver for investors looking for balance in their portfolios.  Ten-year gilt yields have already risen one percentage point from their lows of last year, which is a reasonable retracement given the extent of the recovery and the expectation for a continuation of sub-trend growth. While I believe that there is a chance 10-year yields can still drift higher in the second half of the year, for the moment the more significant sell-off has occurred. ...