Wealth Manager - the site for professional investment managers

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

The FCA issues fresh warning on corporate bond funds

5 Comments
The FCA issues fresh warning on corporate bond funds

The Financial Conduct Authority (FCA) has issued a further warning to consumers about the risks of investing in corporate bond funds.

The regulator highlighted concerns about liquidity in the underlying market, saying ‘in very extreme market conditions, fund managers could become unable to sell sufficient quantities of bond holdings to fulfil redemption orders, leaving investors unable to sell fund units’.

The FCA also warned that rises in interest rates would likely push down bond prices, while although low, default risk in the corporate bond market also remains.

The regulator urged to investors to consider whether they might need quick access to their money invested in the asset class and whether the risk/reward profile fits with their risk tolerance.

‘These funds are not risk free and the risk factors associated with them should be taken into account when deciding if they represent an appropriate investment opportunity,’ the FCA said.

Back in July 2012, the regulator wrote to major asset managers asking for details on whether they could meet redemptions as investors continued to invest in the asset class while liquidity levels were falling.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Boutique tapes: my business will never be sold

Boutique tapes: my business will never be sold

In the final part of our four part series we discuss consolidation and whether it's getting tougher for boutiques to survive.

Play Boutique tapes: are top managers better off at small firms?

Boutique tapes: are top managers better off at small firms?

In episode three of our series, boutique bosses discuss whether the best fund managers are more likely to thrive at smaller firms.

Play Boutique tapes: if you want a Ferrari, you have to pay for it

Boutique tapes: if you want a Ferrari, you have to pay for it

In the second part of our four-part series, boutique bosses are asked how they can justify the fees charged by active managers.

Read More
Your Business: Cover Star Club

Profile: how this boutique beat the big guns of wealth

Profile: how this boutique beat the big guns of wealth

This small west country offshoot of a local IFA scooped a 2018 Citywire award from beneath the noses of the national challengers

Wealth Manager on Twitter