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The latest Investment Management Association figures show the UK all companies sector taking the biggest share of an ever decreasing pot in terms of gross retail unit trust sales. I am surprised that corporate bonds are not the number one choice. Why? Because interest rates are likely to be around 1 per cent by February, with all that implies for cash returns.

It also appears that a sustained equity rally cannot happen without an easing of credit, something which bond markets are likely to see and respond to first.

Everyone needs some instantly available cash but the question is how much of their wealth a client wants exposed to paltry cash returns. Those who can stomach a bit of risk in exchange for the potential of greater returns should consider the opportunity offered by corporate bond funds.

The Investec sterling bond fund has a highly flexible mandate and can invest in overseas corporate bond markets, UK corporate bonds and high-yield bonds.

Anyone looking at the performance of corporate bonds over recent months will not be enamoured with the thought of holding any themselves. To use a technical phrase, they have been absolutely mullered.

A major reason behind this is the unequal treatment by regulators, particularly in the US, of major institutions that have got into difficulty. Some have been saved while others have been allowed to go to the wall. This has scared off long-term holders of corporate bonds.

Over the last six months or so, we have seen a huge amount of distressed selling as institutional investors, desperate for cash, have dumped bonds on to the market and driven prices down. The result is that yield spreads, by which I mean the difference in yield between Government bonds and corporate bonds, have blown out to levels not seen since the 1930s.

Let us look at what will have to happen for current bond prices to seem accurate. In the 1930s, about one-tenth of investment-grade bonds defaulted on their debt over a five-year period. The market is predicting that half the market will default.

Now, I would be the first to say the current economic outlook is grim but is it really five times worse than the Great Depression? Surely, that cannot be right. Even a situation that is equally as bad as the Great Depression means there is value in parts of the bond market.

As ever, it is impossible to pick the best moment to buy. It is feasible that things will get worse before they get better for bond investors but while they are waiting for recovery, they are receiving good yields, tax-free in an Isa or self-invested personal pension, don’t forget. For the first time, the potential medium-term return on bonds is every bit as good, perhaps even better, than that in the equity market.

The Investec team are extremely experienced in this area, using a combination of economic research to analyse the overall situation and individual bond research to pick up attractive bonds.

The portfolio has more in non-consumer-focused defensive areas with good cashflow such as utilities.

Bond investing is a huge part of Investec’s business, so investors are getting a very dedicated team under fund manager John Stopford. The running yield is 6.6 per cent and the gross redemption yield is 9.3 per cent.

The news looks awful, economically and in markets, but investors should try not to bury their head in the sand. Market falls bring incredible opportunities in due course. Now is the time to be looking at some of these opportunities and corporate bonds must be one of the first ports of call.

Mark Dampier is head of research at Hargreaves Lansdown

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