- With monetary tightening expected to moderate, higher-quality bonds look due a resurgence
- Which funds stand out?
Rising interest rates are a problem for many assets, from tech stocks to infrastructure funds. The pain, however, has been felt especially acutely in the bond space, with the average UK gilt fund losing almost 24 per cent last year and continuing to slide so far in 2023.
The upside of that is higher yields, which look promising from an income perspective while offering more of a margin of safety. Some investors also now see bond funds as a play on the fact that interest rates in major economies are expected to peak. While all bonds and bond funds should benefit from a less aggressive rate cycle, some portfolios are worth highlighting as major beneficiaries.