Investing in bonds

Bonds involve investors loaning their money to an organisation (ie a government or a company), and receiving fixed interest payments over a set amount of time. They are traditionally seen as a safe investment, and a key part of a diversified portfolio.

Bonds have always been a popular investment for British investors, for while their value can fluctuate according to factors such as interest rates and inflation, they provide investors with a regular income.

At MoneyWeek, we'll keep you up to date with what's going on in the bond markets – and whether or not it's a good time to buy them.

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A beginner's guide to bonds

It's easy to become confused about bonds – the term covers a wide range of financial products. Here, Ed Bowsher explains the main types of bond.

How gilts work and why they matter

In this video, Ed takes a look at UK government bonds – how they work, why they are important, and whether you should invest in them.

How corporate bonds work

In his third video on bonds, Ed looks at how corporate bonds work, how risky they are, and whether or not they're a good investment for most people.


MoneyWeek bond watch

Government bond yields around the world started climbing again in Autumn 2010. This showed investors getting more jittery about a toxic mix of soaring state borrowings and rising inflation, and so demanding bigger returns as compensation.

Global ten-year sovereign bond yields

America's ten-year bond yield is arguably the world's most important market indicator: it sets the cost of global long-term borrowing. As with other government bond yields, it falls (prices rise) when economic growth and inflation decline, because the fixed income stream paid by sovereign debt becomes more valuable. Quantitative easing (central bank bond-buying) has lowered yields further.

Eurozone ten-year sovereign bond yields

On the edge of the eurozone, rising default fears have been sending peripheral countries' sovereign debt yields soaring. The rough line in the sand so far is 7% - when yields breach that, it looks like the point of no return.

How will this play out? Watch this page to keep a close eye on those yields – they're a great early warning indicator of trouble ahead.

Spanish and Italian three-year sovereign bond yields

Here's the chart of Spanish and Italian three-year bonds. As investors' fears about these countries' finances grew, yields spiked up sharply.


Bonds: the MoneyWeek view

February 2016: Opt for safety Low-quality corporate bonds have been overpriced for many years. Now investors are heading for the exits: the Bank of America Merrill Lynch High Yield index now yields 9.5%, compared to 6.3% in April 2015. We expect a wave of defaults in the years ahead. Stick to high-quality issues.

See our view on all the major asset classes here.


The assets to buy now – February 2016

Asset allocation is at least as important as individual share selection. So where should you be putting your money? Here’s our monthly take on the major asset classes.

Lloyds bond battle ends badly for investors

Lloyds Bank’s decision to redeem £3bn-worth of bonds has been slammed by investors as unfair and premature. Sarah Moore reports.

How to build your own bond portfolio

Investing in bonds usually means piling into a managed bond fund. But as Bengt Saelensminde explains, that makes little sense in today’s markets.

An emerging debt Armageddon?

It’s not just developed-world companies – emerging-market firms have been on a borrowing binge too.

Junk-bond bubble hisses air

In the past few years, yield-starved investors have stampeded into high-yield corporate debt. But junk bonds aren’t looking so attractive anymore.

High-yield bonds, frontier markets, and fear of Brexit

The market crash is starting to make some edgier investments look interesting, says John Stepek. And how much is sterling’s recent slide to do with fear of Brexit?

The assets to buy now – January 2016

Asset allocation is at least as important as individual share selection. So where should you be putting your money? Here’s our monthly take on which assets to buy now.

Junk bonds: prepare for more pain

The high-yield or junk bonds market hit the headlines this week, with the failure of Third Avenue Management, the biggest failure of a fund aimed at retail investors since 2008.

The corporate bond market is getting jittery

The desperate hunt for yield has left the corporate bond market vulnerable to interest rate rises. With US rates now climbing, things could get very painful, says John Stepek

Has China just issued a warning to Janet Yellen?

China’s change to the way its currency operates has sent a very clear message to the US. John Stepek explains what’s going on, and why it matters.

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