Demand for global bonds soars

Investors have steered clear of UK gilt funds and instead bought global bond funds in their droves, figures show.

The Investment Management Association global bonds sector was the best selling sector in September, attracting £348 million in net retail sales. In July, August and September, the sector saw its highest net retail sales on record, with almost a billion pounds (£974 million) pouring into global bond funds.

‘In contrast to last year, when the higher income sterling corporate bond sector dominated bond sales, investors are now adopting a diversified approach across actively managed sectors,’ comments Richard Saunders, chief executive at the IMA.

Bonds as an asset class also attracted more money than equities in September, with £914 million worth of bond fund sales compared to £760 million for equity funds.

The global bond sector has grown significantly over the past years. Seven years ago there were just 26 funds and now there are 42 for investors to choose from.

Our fund Premier League identified GLG Global Corporate Bond as the highest-performing and most consistent fund in the sector. Over the past three years the fund is up 80.2 per cent.

The IMA sterling corporate bond sector was the best selling sector in August, but has now slipped to second place, with £287 million in net retail sales.

Completing the top five selling sectors for September are Asia Pacific excluding Japan, sterling strategic bond and property.

Funds under management in September totaled £542.6 billion, the highest on record, largely due to a strong rise in equity markets. Funds in Isas were also the highest on record, at £99.9 billion.

'Overall, net retail sales in the first nine months of 2010 were only slightly behind the record levels seen in 2009,' notes Saunders.

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