Using Passive Funds to Invest in Bonds

Looking for a low-cost option to add fixed income exposure to your portfolio? Morningstar analysts pick three passive funds for your perusal

Karen Kwok 10 February, 2016 | 4:33PM

Is your portfolio earning you the best possible rate of income? Are you prepared for this year's interest rate rise? We show you how to maximise yield and where to find dividend payers in our Guide to Income Investing.

Bond markets are dividing, as central banks across the globe adopt wildly differing policies. While the Federal Reserve raised rates for the first time in nine years in December, other major economies are choosing to cut rates. Japan is now in negative interest rate territory, after the yield on the 10-year Japanese government bond went negative on Monday for the first time ever after introducing the policy last week. The European Central Bank is expected to follow suit.

In the UK, government-issued bonds yields, also called gilts, fell following stock market volatility. On top of this divergence, a scandal emerged in Europe this week of a possible manipulation of the $1.5 trillion government bond market involving financial traders.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
iShares Core £ Corp Bond ETF GBP Dist157.30 GBP-0.20
iShares Core UK Gilts ETF GBP Dist14.81 GBP-0.68
Vanguard Global Bond Index GBPH Acc165.61 GBP-0.10

About Author

Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk

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