The safest way into corporate bonds

Corporate bonds are fast becoming this recession's must-have investment, with funds flying off the shelves. But yields may not fully reflect the risk of firms defaulting. So what is the safest way to buy?

Fast becoming this recession's must-have investment, corporate bond funds have been flying off the shelves. During April, £683.7m was invested, the sixth month in a row that corporate bonds have been the most popular asset class among retail investors.

The reasons are simple: until recently many other asset classes were tanking. And with the base rate at 0.5%, the returns on cash have been paltry. By contrast, corporate bonds offer a decent income and are relatively low risk. But are they still a buy?

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