Investors buy AR bond funds as low-risk alternative to gilts

Multi-asset managers are exploring alternative low-risk bond investments as they prepare their portfolios for a more constrained fixed income environment in 2013.

The long-feared sharp rise in UK sovereign yields is still to materialise, and some insist the safe haven trade and ongoing QE will provide a floor for prices. However, room for manoeuvre is becoming increasingly limited as corporate debt yields also touch record lows. Meanwhile, the UK,s debt dynamics continue to deteriorate. Chancellor George Osborne said in last week,s Autumn Statement it is now unlikely the country,s debt-to-GDP ratio will start falling by 2015-2016, as the government had targeted. Bambos Hambi, manager of Standard Life Investments, £2bn MyFolio range, has made...