The Fixed Income Search for Excellence

In recent weeks the global and domestic bond markets have also responded negatively to the shortcomings identified in the US sub-prime mortgage market. Subsequently, many fund managers with fixed interest holdings have switched investments to government issued gilts.

Investor concerns have emphasised the reaction to these events with the negative sentiment spreading from investments with direct exposure to the US sub-prime sector to most other classes of fixed income investments. There does not seem to be any real reasons for this shift with even investment grade bonds, a corporate equivalent to government issued bonds, feeling the effects. Recent falls have been as much as a result of indiscriminate selling due to fears of market collapse rather than sales due to proven deterioration of company prospects.

Although the current turbulent global credit as well as equity markets may take a while to stabilise and recover there will be buying opportunities within this environment with many attractive valuations available.

However, take care to research your investments wisely. Over the years thecredit market has created many instruments to provide access to various forms of debt, such as leveraged structured products and Collateralised Debt Obligations (CDOs) and has become very complicated.

If in doubt, seek professional advice to find the most suitable product for you.

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