View more on these topics

There is no alternative to bonds, says Dennehy

Dennehy Weller managing director Brian Dennehy says investors are piling into bonds as they face Hobson’s Choice.

He says the big difference between the bond spree and the dotcom bubble is that investors are not “euphorically” charging into corporate bonds as they did with tech. “In contrast, the buying is because investors are being cautious, sensing Hobson’s Choice,” he says.

Dennehy does not believe bond valuations point to a bubble. He says: “Current yields imply 40 per cent of all investment-grade bonds will go bust over the next five years, which is silly. Even if you exclude financials, the implied default rate is 15-20 per cent, compared with a historic peak in the UK of 4 per cent.”

Hargreaves Lansdown investment manager Ben Yearsley says: “Lots of people are saying you should have bonds. The prices are low, indicating there is no asset bubble. If you are seeking income, there is a case for Hobson’s Choice to a degree but you can go elsewhere for income, depending on the risk you want to take.”

Recommended

Annual Kickout Plan from Keydata

Keydata has launched its first five-year Annual Kickout Plan, which offers investors the choice of early maturity at each plan anniversary, with a rising bonus facility.

New Star underperformers get new managers

Investors in the underperforming New Star Higher Income and Sterling Bond funds can expect changes to the portfolios, after manager changes last week.Following the completion of the mer­ger of Henderson and New Star, Toby Thompson manager of Higher Income and Phil Roantree, manager of Sterling Bond, will not move to Henderson. In Thompson’s place steps […]

Frexit & contagion risk in Europe

Rob Burnett, Head of European equities at Neptune Many commentators have suggested that the UK’s exit from the European Union will trigger a domino effect, leading to its eventual break-up. Is this likely and what is the mechanism for this to happen, asks Rob Burnett, Manager of the Neptune European Opportunities Fund. Read more: https://www.realworldinvestors.com/Posts/Read/1371/Frexit_and_contagion_risk_in_Europe […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment