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Bond funds are a useful part of your investment portfolio because of the diversification they offer. This is because bonds and shares perform quite differently to each other. But, when you’re looking to invest in a bond fund, you need to understand how strong the credit analysts are within the team running the fund. These are the investment professionals who analyse the market to decide which companies offer the best investment potential.
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Investing in shares of a company is simply owning a part of that business. Investing in bonds of a company, on the other hand, is much like lending money to that company. This is why shares and bonds perform very differently to each other. Share prices can be quite volatile in the short term, as they continually price in changing market conditions and future fortunes of the company.
Bond prices, on the other hand, tend to be quite stable in comparison, because they focus more on the company’s ability to repay the debt when it matures at some point in the future. And because they behave differently, both bonds and shares have a place in a diversified investment portfolio. But you need to put just as much hard work into choosing the right bonds to invest in, as you do with shares.
When it comes to lending money to companies, it’s crucial to understand how likely you are that the companies will pay you back. When it comes to investing in bonds, this means carrying out extensive work to assess the strength of these businesses.
Asking questions such as, how fit is the company today? How fit will it be when the bond is due to be repaid? Will the company be able to meet its interest payments in the meantime? It’s a full-time job, carried out by investment professionals known as credit analysts. And a team of strong credit analysts is key to investing in the corporate bond market.
The Invesco Corporate Bond Fund invests primarily in companies that issue bonds in sterling. This means mainly UK companies, but also some overseas companies who issue sterling denominated bonds. The teams of credit analysts at Invesco spend their time analysing these companies to seek out attractive investment opportunities. This means looking for bonds issued by strong companies, but where their bond prices don’t reflect this. Just like with shares, some parts of the bond market are undervalued and underappreciated.
Invesco has one of the most experienced and well-respected teams in the UK corporate bond market. Their flexible approach to investing has meant being able to seek out and invest in opportunities wherever they appear. And having demonstrated the ability to add value through deep and detailed research is why the fund has a place in the Barclays Funds List.
If you’re looking to add a bond fund to your investment portfolio, the Invesco Corporate Bond Fund could be worth considering. There are other bond funds on the Barclays Funds List, some of these investing in different parts of the bond market and offering the potential for different yields and total returns. Find out more information on these funds.
Correct at the time of publishing.
To diversify your investment, you may like to consider our own Barclays Ready-made Investments (RMI). The RMI are just one example of a range of diversified funds which allow you to select the level of risk you are most comfortable with. These Barclays multi-asset funds invest in passive funds across a range of asset classes and regions, offering a globally diversified solution for investors. Ready-made Investments are not the only funds that we offer and they won’t be appropriate for everyone.
Past performance of the fund and its manager are not a reliable indicator of their future performance.
We don’t offer personal investment advice so if you’re unsure you should seek that independently.
Funds are designed for the long term so you should only consider them if you can stay invested for at least five years.
These are our current opinions but the future, as ever, is uncertain and outcomes may differ.
Read the Assessment of Value report [PDF, 3.2MB] for funds run by Barclays.
The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and their effects on you will depend on your individual circumstances.
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