By ROSIE MURRAY-WEST, Mail on Sunday, 13 Nov 2023:
If any of your money is in corporate or Government bonds, you’ve had more than just an annus horribilis. Figures from Bloomberg suggest you’ve just endured the biggest bond crash in 150 years, including three consecutive calendar years of negative growth.
The fall in bond prices has been a horrible shock for those investors who traditionally use these bonds as a stabilising force within their portfolios such as those profiled below. They are nursing unexpected losses on funds they believed to be almost risk-free.
Yet what goes down often comes back up, and many financial experts believe that now is the time to build a portfolio of well-priced bonds with relatively high yields…
Now, bond prices are on the floor, inflation has stabilised, and yields are higher than the return you can get from your savings account. It appears to be the perfect time to take the plunge with a bond portfolio. But these investments require understanding and are not for the faint-hearted, so make sure you do your homework first…
But the aggressive run of hikes came to a halt in September with the Bank holding interest rates steady. It backed another pause on rates a fortnight ago. Many believe we are now near the peak, with widespread forecasts that the Bank will start to reduce interest rates in the latter half of next year.
James Carthew, head of investment companies at QuotedData, says that if this is the case then bond prices will rise, which is good news for those who get in now.
‘If you feel strongly that interest rates are going to fall from here – even if that process does not start for a while yet – you would want to hold longer-dated bonds,’ he says.
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