Two thirds of independent financial advisers (IFAs) are confident that conditions for the fixed income market will remain positive this year, according to findings from a new report.
Following a survey of more than 400 IFAs at the ABC of Bonds Roadshow, one in five IFAs said they planned to encourage their clients to increase their exposure to fixed income investments over the next 12 months.
Meanwhile, greater diversification will be the focus for many IFAs as 86 per cent said they will recommend that their clients diversify their fixed income portfolios.
The most popular type of fixed income fund amongst IFAs appears to be the strategic bond as 65 per cent said they would recommend this fund to their clients, ahead of absolute return bond funds and corporate bond funds.
Commenting, Robert Thorpe, director of UK advisory sales at Cazenove Capital said: "Diversification will be one of the key themes in the fixed income market this year, and our research suggests that the biggest winners could be strategic bond strategies."
Meanwhile, Rod Aldridge, head of UK retail distribution at Barings, is not surprised a greater focus is being placed on the fixed income market as interest rates remain low.
"Higher rate taxpayers need to secure an interest rate on their savings of at least 3.17 per cent to beat the current level of inflation but only nine savings accounts out of nearly 800 offers this. This and the fact that there have been a number of attractive opportunities in the fixed income market have meant that investors have placed a greater focus on this sector," he said.
Reacting to diversification becoming a greater focus for many IFAs in 2010, Rob Bailey, head of UK sales at AXA Investment Managers, added: "With uncertainty surrounding some of the government debt issues I am not surprised to see that 39 per cent and 27 per cent of intermediaries plan to recommend investing in global bond funds and high yield bond funds respectively.
"These funds will offer investors added diversification and a greater spread of risk within their fixed income portfolios."
© Fair Investment Company Ltd
