Two bond funds to buy in case inflation doesn't take off

We could well avoid sustained price rises, in which case these bond funds look a solid bet, says Max King

Shanghai, China
China is keeping a lid on credit growth
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With bond yields having started to rise but still very low by historic standards, it is hard to find anyone with a positive case for investing in them. Reckless monetary expansion and fiscal incontinence in the UK, Europe and North America are expected to lead to inflation and a consequent jump in bond yields, reflecting falling prices.

Such warnings are not new: in January 2010, bond guru Bill Gross warned that gilts, then yielding 4% for ten-year maturities, “rested on a bed of nitroglycerine” – only to change his mind three years later when yields had halved. Now ten-year gilts yield just 0.8%; surely the wolf is at the door?

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.