Investment grade corporate bonds have had a stellar year, with returns running close to 5% over the past five months alone. Andreas Michalitsianos, manager of the JPM Sterling Corporate Bond fund, asks whether something is going to give soon.
The overwhelming consensus going into 2014 was that equities would benefit from the recovering growth story, and fixed income would suffer. Neither has played out. Offering less yield than their racier high yield cousins, and yet sensitive to the price moves in government bonds, it is easy to see why many thought investment grade corporate bonds would be one of the laggards of the market. While this has confounded many investors, looking at the drivers of the investment grade corporate bond market can help shape an informed outlook for the future. Higher returns Firstly, demand an...
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