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&#39Time right for high-yield bonds&#39

Stockbroker Killik & Co bel-ieves it is a good time to invest in high-yield corporate bonds but is recommending that investors should invest through investment funds rather than directly.

It says gilts and high-quality corporate bonds have outperformed equities in recent years. But Killik expects interest rates will remain low, meaning it is a good time to move away from the high-rated end of the bond market, which tends to be more sensitive to interest rates than high-yield bonds.

It says there are signs of economic recovery and that these bonds tend to fare better in such scenarios. It recommends the Aberdeen fixed interest, Standard Life higher-income and Invesco Perpetual European high-yield bond funds.

Associate director of fund research Mick Gilligan says: “Although the recovery is likely to be jittery, investors should improve the long-term risk/reward profile on their income portfolio by reducing their gilt and investment-grade exposure in favour of better value in the high-yield corporate bond class.”

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