Unlike the US, most investors in the UK are unaware of the benefits of corporate bond investing. Traditional wealth managers assume bonds mean gilts. Understandably, the extremely low yields available on gilts do not excite many investors. Corporate bonds will typically yield 3x as much as gilts for equivalent durations, but are incorrectly viewed as being risky and complicated, when in fact most corporate bonds are simple and safe.

Wimbledon Capital was established in the belief that corporate bonds should be the core diversifying fixed income class for most investors. Corporate bonds are particularly good diversifying investments for City professionals whose careers and compensation structures are already heavily exposed to equity markets. Corporate bonds offer much better risk/return characteristics than gilts in this regard - although in certain circumstances we will also recommend gilt exposure.

Wimbledon Capital believes investors will usually be better off owning individual corporate bonds directly rather than investing through a pooled fund. This is because bonds are fairly illiquid and investors in pooled funds are exposed to other investors' redemption demands. Pooled funds cannot create tailor-made duration and credit profiles either. They are also expensive with average OCFs higher than equity funds.

While equities should be the best performing asset class over the very long term bonds are excellent diversifying investments, and should have a place in every portfolio. In particular, for investors with time horizons of 20 years or less, bonds should constitute a significant part of a portfolio.

E: info@wimbledoncapital.com
T: 020 8944 7860

Wimbledon Capital
10 Parkside Avenue
London SW19 5ES

Click to connect with us on LinkedIn