5 Top Rated Bond Funds

Global bond exposure provides a counter to equity market volatility in a well diversified ISA portfolio - and certain funds can deliver exceptional income too

Emma Wall 9 April, 2014 | 11:01AM

Investors have been warned not to over-concentrate their fixed income exposure. The UK bond market only makes up about 6% of available bonds worldwide, but when it comes to fund selection the British tend towards better-the-devil-you-know investing.

“Many UK investors still prefer to ‘buy local’ and invest in names that they recognise. Home bias can lead to concentrated portfolios. By diversifying globally investors can reduce the idiosyncratic risk of any particular market or company,” advised Peter Westaway head of Investment Strategy for Vanguard Asset Management.

“Ten years plus bond maturities make up roughly 45% of the UK market but only 20% of the global market. This implies more interest rate risk compared to global bonds from higher duration. Global bonds can help diversify interest rate risk.”

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Invesco Global Bond UK Acc135.28 GBP-0.89
iShares Overseas Corp Bd Idx (UK) A Acc154.41 GBP-0.58
JPM Global Aggregate Bond A (acc) USD13.44 USD0.51
Legg Mason BW Glb FI A USD Acc133.93 USD-1.01
Templeton Global Bond A(acc)USD28.31 USD-0.26

About Author

Emma Wall  is former Senior International Editor for Morningstar

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