From the point of view of private investors, bonds have been the Cinderella asset class for many years. Of late, this view has been changing. Faced with sub-1 per cent interest rates paid on savings accounts, and continuing volatility in the equity markets, the appeal of a locking in a pre-determined rate of return with only moderate levels of risk has become more appealing.
Whilst many private investors will choose to invest in this asset class via managed funds or ETFs, - bond fund sales rocketed in the first few months of this year - direct investment in the gilt and corporate bond market is also growing. Advances in market transparency and the convenience of electronic execution platforms means that the UK corporate bond market, once the domain of market professionals, is now open to the man on the street.
Online brokers such as Selftrade, Barclays Stockbrokers, TD Waterhouse and Hargreaves Lansdown offer fixed-price execution in these instruments, whilst the more traditional full-service brokers such as Killik, Charles Stanley and Redmayne Bentley can offer advisory service. Many investors are choosing to go down these routes, cutting out the fund manager's charges and ensuring that they have a portfolio that meets their exact requirements in terms of maturity profiles, yield and level of risk.
