Corporate bonds look costly: but these two risky plays might pay off

Corporate bonds have been very popular investments of late - but they are now looking expensive. Phil Oakley asks whether there is any value left in them, and picks two risky but potentially lucrative bonds to buy now.

Investors' love affair with corporate bonds shoes no sign of waning. It's not hard to see why: they have produced decent returns during the last few years. Over the last year alone, UK corporate bonds have risen by 11% compared to the FTSE 100 which is virtually unchanged (excluding dividends).

But should you still be buying them now? We're not so sure.

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Unilever4.752017112.65115.654.1%1.89%3.61%1.72%
United Utilities Water5.3752018112.3114.84.7%2.92%4.90%1.98%
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Severn Trent Water6.1252024118.51225.0%3.93%4.10%0.17%
National Grid Gas8.752025147150.55.8%3.92%5.60%1.68%
Vodafone5.6252025116.9119.94.7%3.83%5.20%1.37%

Phil spent 13 years as an investment analyst for both stockbroking and fund management companies.

 

After graduating with a MSc in International Banking, Economics & Finance from Liverpool Business School in 1996, Phil went to work for BWD Rensburg, a Liverpool based investment manager. In 2001, he joined ABN AMRO as a transport analyst. After a brief spell as a food retail analyst, he spent five years with ABN's very successful UK Smaller Companies team where he covered engineering, transport and support services stocks.

 

In 2007, Phil joined Halbis Capital Management as a European equities analyst. He began writing for MoneyWeek in 2010.