The hidden dangers of investing in corporate bonds

Corporate bonds are becoming easier for private investors to dabble in – but watch out: there are hidden catches, says Phil Oakley. Here's why you need to be careful when buying bonds.

Since the turn of this century, having your money in shares has rarely been a pleasant experience. In that relatively short period, we've seen two of the most severe stockmarket crashes on record. For many of those relying on equities to save for their retirement, the only way they'll have eked out any sort of return has been by collecting and reinvesting their dividends.

It's little wonder the patience and nerves of many investors have been tested.

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Intermediate Capital Group20206.25100.756.20%5.467%
CLS Holdings20195.599.55.53%1.73169%
ICAP20185.5102.655.36%11.2452%
Primary Health Properties20195.3751025.27%1.61179%
Severn Trent20221.3101.351.28%1.72448%
Tesco Personal Finance20205104.854.77%9.9866%
Provident Financial20177105.96.61%3.3321%
Places for People20221100.51.00%1.22654%
Intermediate Capital Group20187105.96.61%5.467%
Tesco Personal Finance20171100.90.99%9.9866%
RBS20182115.881.73%1.891,028%
National Grid20211.25100.31.25%2.18249%
Places for People20165106.64.69%1.22654%
Lloyds TSB20165.5108.265.08%1.351,425%
Beazley20195.375103.155.21%4.7325%
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CLS Holdings7212.43%5.53%4.69
Intermediate Capital3046.01%6.61%2.15
ICAP330.346.17%5.36%1.94
Severn Trent1,6904.14%1.28%1.26
Tesco337.574.38%4.77%2.53
Provident Financial1,3625.05%6.61%1.30
National Grid7005.57%1.25%1.31
Beazley1694.65%5.38%1.05

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.