Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and 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 JPM’s Negyal: Back divis to temper EM volatility

JPM’s Negyal: Back divis to temper EM volatility

Omar Negyal, co-manager of the JPMorgan Global Emerging Markets Income trust, says a dividend approach to emerging markets reduces the volatility of investing in the asset class.

Play WMR: Why Russia will lose this war

WMR: Why Russia will lose this war

Author and journalist Adam Lebor believes a perfect storm is brewing when it comes to the Russian economy. .

Play WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

Chief economic adviser to London mayor Boris Johnson outlines the geo-political risks in Asia and explains why the risk of another eurozone crisis must not be underestimated.

Your Business: Cover Star Club

Profile: 'new normal' now is as dangerous as when it was applied to tech

Profile: 'new normal' now is as dangerous as when it was applied to tech

7IM's CIO Chris Darbyshire says he has been re-energised by his new role, but has little time for 'new normal' doom-mongers

Wealth Manager on Twitter