But this year it severely underperformed its index. On top of that Sterling has declined against the USD so we lost more in USD terms but that's an unfair comparison as this money was likely to be kept in Sterling or Euro investments in any case. The reason for this year's poor performance is of course the corporate bond market which is 80% of the fund:
So, I guess we'll hold on and wait for corporate bonds to recover?
2 comments:
Yes, keep the fund, corporate debt should recover first, with equities following afterwards.
The Invesco Sterling bond fund suffered greater than comparable funds in the sector during 2008. One of the main reasons for this is that the managers took the call to move into bank corporate debt a bit too early, with the spreads of said debt continuing to widen over the remainder of the year. Corporate bond spreads have been closing back over the last few months but are still no where nearback to normal. When spreads do snap back they they should do so quite quickly
Regards - A Fund analyst for a private bank
Thanks Anon for the comments!
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