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Sterling Corporate Bonds

Update 9th December 2011: In early 2009 corporate bonds presented an historic opportunity. The party was over for corporate bond funds in the sense that the fizz of 70% returns over two years were not going to be repeated in the two years ahead, and probably not in your lifetime. 

In March, when bond guru Bill Gross insisted Treasuries were trash, we highlighted the deflationary pressures (high oil and food prices, low pay settlements, rising taxes, lower government spending) and the attractions of high quality bonds. High unemployment continues to keep a cap on wage inflation and confidence, and consumers are choosing debt repayment over discretionary spending. Thus money is being taken out of the economy from numerous directions, akin to letting air out of a balloon, and deflationary.

Those investors who listened were rewarded. Such a deflationary mix has been to the benefit of high quality bonds, both sovereign and corporate. While there is little doubt about the long term inflationary risks, we are in the midst of an extraordinary global financial experiment and the number of possible outcomes is mindboggling. Corporate bonds (assuming limited exposure to PIIGS) may continue to provide a temporary safe haven for capital preservation in the months ahead term.

We would recommend that investors choose their bond funds with care and don’t overdo their exposure. In the years ahead interest rates (and inflation) will pick up and this will be another headwind for corporate bonds.

If you sort the table by ‘One year cumulative value’ and order by ‘Best Performing’ you can glance along the row to see performance over various periods. What we are looking for is consistency of performance.

In the curernt environment we favour funds such as M&G Corporate Bond with its focus on capital preservation. The fund's performance has not only benefited from manager Richard Woolnough’s aversion to bank bonds but also its duration position – in other words the fund had increased its sensitivity to falling bond yields.

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Growth (%)
1 Month 6 Month 1 Year Monthly risk
Fund name Value Rank Value Rank Value Rank Value Rank
Aberdeen Charity Select UK Bond TR in GB -0.2 87 6.07 11 10.46 14 1.98 12
Aberdeen Corporate Bond TR in GB -0.42 94 -3.22 95 1.07 94 2.93 70
Aberdeen Multi Manager Sterling Bond Portfolio TR in GB -0.82 101 -3.49 97 -0.81 97 1.61 5
Alliance Trust Monthly Income Bond TR in GB -0.48 95 -6.66 101 -2.3 100 0 0
Allianz PIMCO UK Corporate Bond TR in GB 0.08 62 1.06 46 5.24 49 2.8 61
Architas MM High Income Portfolio TR in GB 0.05 66 -0.74 74 2.6 85 2.37 33
Aviva Inv Corporate Bond TR in GB 0.23 42 0.16 56 4.71 56 2.5 43
Aviva Inv Monthly Income Plus TR in GB 0 68 -2.59 90 2.39 86 2.52 47
Aviva Inv Sustainable Future Corporate Bond TR in GB 0.29 38 -0.23 65 3.88 72 2.37 32
AXA Sterling Corporate Bond TR in GB 0.16 50 0.06 58 4.05 69 3.1 76
AXA Sterling Credit Short Duration Bond TR in GB 0.4 23 -0.39 68 1.68 92 0 0
AXA Sterling Long Corporate Bond TR in GB -0.08 75 5.83 13 10.52 13 4.38 84
Baillie Giff Investment Grade Bond TR in GB 0.07 64 2.81 25 9.36 17 8.64 94
Baillie Giff Investment Grade Long Bond TR in GB -0.1 79 5.86 12 13.79 3 5.82 91
BAM Corporate Bond TR in GB 1.19 5 3.03 23 6.54 35 2.83 62
Barclays Sterling Corporate Bond TR in GB -1 103 1.13 45 6.01 40 2.55 50
BlackRock CIF Corporate Bond 1 to 10 Year TR in GB 0.29 35 -2.54 89 1.87 90 0 0
BlackRock CIF Corporate Bond Tracker TR in GB 0.19 46 2.01 35 6.64 33 0 0
BlackRock Corporate Bond TR in GB 0.23 43 -0.64 71 4.51 61 2.98 71
Cazenove UK Corporate Bond TR in GB -0.32 92 -0.69 72 3.63 76 3.37 79
CBF Church of England Fixed Interest Securities TR in GB 0.36 26 7.55 7 11.63 11 0 0
CF Canlife Bond TR in GB -0.97 102 1.46 43 4.97 53 5.91 92
CF GHC MultiManager Fixed Interest TR in GB -0.66 100 -1.61 86 1.48 93 2 13
CF Walker Crips Corporate Bond TR in GB 0.64 12 2.08 34 5.81 42 1.65 7
CIS Corporate Bond Income TR in GB -0.14 83 -2.29 87 2.15 87 2.88 66
Cler Med Income TR in GB 0.11 57 1.68 41 5.89 41 2.72 58
Coutts Sterling Bond Prog TR in GB 1.52 1 10.8 2 13.48 4 3.48 80
Epworth Affirmative Corporate Bond TR in GB -0.57 98 2.5 29 7.43 28 0 0
Epworth Affirmative Fixed Interest TR in GB 0.17 47 8.67 3 13.11 7 0 0
F&C Corporate Bond TR in GB 1.29 4 -0.47 69 4.29 66 2.32 30
F&C Ethical Bond TR in GB 0.09 59 1.87 38 6.12 38 2.52 48
Fidelity Inst UK Aggregate Bond TR in GB 0.56 15 6.56 9 12.43 8 2.32 31
Fidelity Inst UK Corporate Bond TR in GB 0.09 60 1.8 39 7.04 29 2.37 33
Fidelity Inst UK Long Corporate Bond TR in GB 0.09 61 5.12 15 11.18 12 3.25 78
Fidelity MoneyBuilder Income Reduced Duration TR in GB 0 0 0 0 0 0 0 0
Fidelity Moneybuilder Income TR in GB -0.14 84 2.82 24 6.87 32 2.06 14
Halifax Corporate Bond TR in GB -0.24 90 -3.2 94 0.72 95 2.19 22
Henderson All Stocks Credit TR in GB 0.26 39 2.61 27 6.96 30 2.29 29
Henderson Long Dated Credit TR in GB 0.07 65 8.08 4 13.79 2 3.97 82
Henderson Sterling Bond TR in GB 0.4 22 1.39 44 5.32 47 5.48 89
HSBC Corporate Bond TR in GB 0.15 52 0.57 49 4.97 54 2.39 36
IFDS Brown Shipley Sterling Bond TR in GB -0.32 93 -5.04 98 -2.74 101 2.18 20
Ignis Corporate Bond TR in GB 0.12 55 -0.15 62 4.96 55 8.86 95
Insight Investment Sterling Corporate Bond TR in GB 0.32 32 0.34 51 5.03 51 5.66 90
Insight UK Broad Market Bond TR in GB 1.03 7 6.9 8 13.18 6 4.58 86
Insight UK Corporate All Maturity TR in GB -0.04 71 1.96 37 8.14 24 5.43 88
Insight UK Corporate Long Maturities Bond TR in GB 0.12 56 3.94 20 11.89 10 5.38 87
Invesco Perp Corporate Bond TR in GB -0.28 91 -5.77 99 -1.68 98 2.24 26
JPM Bond For Charities TR in GB 0.75 10 7.63 6 12.09 9 2.99 72
JPM Sterling Corporate Bond TR in GB 0.71 11 1.98 36 6.95 31 2.83 63
Jupiter Corporate Bond TR in GB 0.16 51 0.43 50 5.09 50 2.07 15
Kames Ethical Corporate Bond TR in GB 0.33 29 1.69 40 6.59 34 2.22 24
Kames Investment Grade Bond TR in GB 0.24 41 0.32 52 4.57 59 2.48 40
Kames Sterling Corporate Bond TR in GB 0.15 54 -0.96 79 4.08 68 2.9 67
L&G (Barclays) Monthly Income TR in GB 0.32 30 1.48 42 5.38 45 2.51 45
L&G (N) High Income TR in GB 0.15 53 -1.26 85 2.85 83 2.1 16
L&G Fixed Interest TR in GB 0.29 36 0.18 55 4.7 57 2.85 64
L&G Managed Income TR in GB 0.4 21 -0.2 64 4.35 64 3.05 75
L&G Managed Monthly Income TR in GB 0.29 37 -0.86 75 3.73 75 2.65 56
Lazard Sterling Corporate Bond TR in GB -0.13 82 -2.32 88 2.15 88 3 73
Legg Mason Global Blue Chip Bond TR in GB 0.17 48 -0.1 61 3.34 79 2.5 44
M&G Charibond TR in GB 0.78 9 6.15 10 10.24 15 2.25 27
M&G Corporate Bond TR in GB 0.57 14 4.21 17 9.3 18 2.73 59
M&G Strategic Corporate Bond TR in GB 0.58 13 3.79 21 8.83 21 1.91 11
Marlborough Bond Income TR in GB 1.08 6 2.36 32 6.03 39 2.18 19
Morgan Stanley Sterling Corporate Bond TR in GB -0.13 81 -0.9 78 3.85 73 2.37 35
Natwest Extra Income TR in GB -0.55 97 -0.38 67 4.39 63 2.62 55
Newton Corporate Bond TR in GB 0.42 20 0.14 57 4.28 67 2.27 28
Newton Long Corporate Bond TR in GB 1.01 8 7.69 5 13.46 5 4.04 83
Old Mutual Corporate Bond TR in GB 0.32 31 -0.5 70 3.07 80 2.92 69
Premier Corporate Bond Monthly Income TR in GB -0.58 99 -6.55 100 -2.09 99 2.49 42
Rathbone Ethical Bond TR in GB 0.39 25 -2.89 93 1.77 91 2.61 54
RBS Sterling Bond TR in GB 1.44 2 11.31 1 15.52 1 3.11 77
Royal Bank of Scot Extra Income TR in GB 0 69 0.22 53 5.02 52 2.56 51
Royal Liver UK Fixed Interest TR in GB -0.03 70 -1.09 81 3.79 74 2.57 52
Royal London Corporate Bond TR in GB 0.36 27 0.77 48 6.47 37 2.15 18
Royal London Ethical Bond TR in GB 0.26 40 2.32 33 8.07 25 2.11 17
Royal London Sterling Credit TR in GB 0.53 16 2.54 28 8.3 22 1.77 8
S&W Church House Investment Grade Fixed Interest TR in GB 0.19 45 0.91 47 5.63 43 1.57 4
Santander Balanced Portfolio Income TR in GB 0.46 18 4.08 19 7.47 27 2.44 38
Santander Sterling Corporate Bond TR in GB 0.29 34 3.3 22 7.56 26 1.78 9
Schroder All Maturities Corporate Bond TR in GB 0.16 49 -0.05 60 4.55 60 2.59 53
Schroder Corporate Bond TR in GB -0.51 96 -7.43 104 -4.82 102 2.69 57
Schroder Long Dated Corp Bond TR in GB 0.11 58 4.94 16 9.82 16 4.44 85
Scot Wid Corporate Bond TR in GB -0.18 85 -0.89 76 4.33 65 2.73 60
Scot Wid HIFML Corporate Bond TR in GB -0.23 88 -3.23 96 0.69 96 1.35 3
SJP Investment Grade Corporate Bond TR in GB 0.07 63 -2.86 92 2.73 84 1.3 2
Skandia Corporate Bond (Signature) TR in GB 0.3 33 2.38 31 5.33 46 8.3 93
Stan Life Inv AAA Income TR in GB -0.09 76 4.16 18 8.91 20 2.91 68
Stan Life Inv Corporate Bond TR in GB -0.09 78 -1.09 82 4.63 58 2.87 65
Stan Life Inv Ethical Corporate Bond TR in GB -0.19 86 -1.24 84 3.94 70 2.48 41
Stan Life Inv Select Income TR in GB -0.09 77 -2.75 91 1.91 89 2.42 37
Standard Life TM UK Corporate Bond TR in GB -0.23 89 -0.31 66 5.62 44 2.54 49
SWIP Corporate Bond Plus TR in GB -0.12 80 -1.18 83 4.45 62 3.01 74
SWIP Sterling Bond Plus TR in GB 0.48 17 5.29 14 9.05 19 2.52 46
SWIP Sterling Credit Advantage TR in GB -1.12 104 -6.84 102 -5.6 103 1.63 6
Thesis Optima Bond TR in GB 0.44 19 -0.18 63 3.93 71 1.9 10
Threadneedle Navigator Income TR in GB 0.04 67 -0.97 80 3 82 2.22 25
Threadneedle UK Corporate Bond TR in GB -0.07 74 -0.72 73 3.41 78 2.46 39
TIF III Medium & Long Dated Corporate Bond TR in GB 1.38 3 2.45 30 8.2 23 0 0
TIF III Short Dated Corporate Bond TR in GB 0.4 24 0.05 59 3 81 0 0
TIF III UK Corporate Bond TR in GB 0.23 44 0.2 54 5.31 48 2.21 23
TwentyFour Monument Bond TR in GB -0.05 72 -7.26 103 -6.1 104 1.06 1
UBS Corporate Bond UK Plus TR in GB 0.35 28 -0.9 77 3.47 77 3.5 81
WDB Fixed Income TR in GB -0.05 73 2.67 26 6.53 36 2.19 21

 




Dennehy Weller & Co Ltd, 3 High Street, Chislehurst, Kent, BR7 5AB. Tel: 020 8467 1666. Authorised and regulated by the Financial Services Authority (http://www.fsa.gov.uk/register/home.do). FSA Registration No: 114360. Registered in England & Wales, No. 1476316. Registered Office: 303 High Street, Orpington, Kent, BR6 0NN. The information contained within this site is subject to the UK regulatory regime and is therefore targeted primarily at investors based in the UK.