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Bond boom fears as funds double

Advisers have raised concerns over the amount of cash pouring into UK corporate bond funds after some have almost doubled.

Morningstar data shows M&G’s corporate bond fund has grown by 86 per cent between December 15, 2008 and March 30, 2009, from £1.29bn to £2.4bn, while Invesco Perpetual’s fund has grown by 36 per cent from £2.5bn to £3.4bn.

Other leading firms to see assets swell include Jupiter and Schroders, while M&G’s strategic corporate bond, the leading fund in the sector over three years, has risen by 153 per cent from £254m to £643m.

Hargreaves Lansdown investment manager Ben Yearsley says: “There are concerns that if you do not have the right manager at the helm, the wrong choice out of financials or defensives, for example, at the wrong time could lead to big problems.”

M&G managing director Jonathan Willcocks says: “It is not problem, as high inflows are a benefit for us. They allow us to cherrypick from the huge raft of new issues out there.”

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