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No bond bubble, says M&G

M&G corporate bond fund manager Richard Woolnough has hit back at claims that the impressive performance of bonds in recent years has created an unsustainable bubble.

Woolnough dismissed the idea of a bond bubble, saying long-dated yields are cheap by historical comparison with 30year gilt annual yields at just under 5 per cent compared with almost 5.75 per cent in May 1998. Woolnough believes the economic background is still bond-friendly and says there are no UK inflationary pressures to be seen.

One delegate said Woolnough would be bullish on bonds because of M&G&#39s reputation as a bond house.

But Law Society (Northern Ireland) financial adviser Denis Mackie says: “There is no bond bubble. Customers are much more confident at the moment and there is no reason why this should not carry on.”

Woolnough said: “If life firms are unwilling to take the risk of equities and if pension schemes are following suit, what is an individual supposed to do? There is no bubble – the bond market is nice and steady.”

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