The last three years of market turbulence has understandably led investors to seek a safer haven for their money. Corporate bonds carry less risk than equities and have been a major beneficiary of investors' cash during difficult market conditions.
In recent months,we have seen speculation about whether the bond market can sustain its performance but I believe the outlook, especially for UK bonds, is not necess-arily negative. Investors should always include some exposure to corporate bonds as part of a balanced portfolio.
The M&G strategic bond fund, to be laun-ched on February 2, will be managed by former Old Mutual fund manager Richard Wool-nough. His aim is to keep the fund lean and focused, which is achieved with a usual stock selection of between 60-80 funds. Although he is free to invest in all bond types, the fund will be classified as a pure corporate bond fund, with at least 80 per cent in investment-grade bonds.
Richard's past performance in the corporate bond arena has been excellent. He ran the Old Mutual corporate bond fund since its launch in January 2000. The fund grew by 31.26 per cent, placing it first out of 79 in its sector over three years and over two years it was fourth in its sector with growth of 10.72 per cent.
Richard has the biggest team of credit analysts in the City behind him as well as a team of specialist dealers, investment writers and experts in many other areas of fixed income. In case you had not already guessed, I like the look of this fund a lot and I feel it is in very safe hands.
Darius McDermott is managing director at Chel-sea Financial Services