A combination of market volatility and mass dividend cuts has cast fresh light on bonds as a source of income in 2020. Initially caught out in the Covid-19 sell-off earlier this year, the yields on corporate bonds moved out to attractive levels amid the volatility and could potentially replace some of the income lost in the equity space.
Attractive yield
Flexible approach
Experienced team
Strong track record
High risks
As with many high-yielding assets, bonds that provide a good level of income do come with significant risks. High-yield bonds, for example, are highly correlated to moves in the equity market, and the companies issuing the debt are at risk of defaulting on their obligations in times of economic difficulty. In this context, higher bond yields are best accessed via a flexible fund that can invest across the fixed income universe and even take more defensive positions where required.