Are Bonds Adding to Your Equity Exposure?

Check correlations before adding credit-sensitive fixed-income assets to your portfolio

Christine Benz 5 July, 2012 | 4:01PM
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These are trying times for yield-seekers. The Bank of England’s Monetary Policy Committee has kept interest rates at a record low since for more than three years and there’s little sign of respite on the horizon.

That might be good news for those in the market for home loans, but it's surely unwelcome for seniors and others trying to wring a liveable income stream from their portfolios.

On the Hunt for Yield
Given that unyielding (sorry, couldn't resist) backdrop, it probably shouldn't be surprising that some investors appear to be doing a little good old-fashioned yield-chasing. Among bond funds, some of the biggest beneficiaries of new assets during the past year have been those that offer higher yields than plain-vanilla, high-quality bonds in exchange for some extra 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.

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About Author

Christine Benz

Christine Benz  is director of personal finance at Morningstar and author of 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances.