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 Sam Vecht: the best opportunities in frontier markets

Sam Vecht: the best opportunities in frontier markets

Blackrock's Vecht evaluates frontier markets and explains where he sees the opportunities

Play Where A-rated Pattullo is finding the best bond opportunities

Where A-rated Pattullo is finding the best bond opportunities

Henderson Global Investors head of retail fixed income explains how he is managing his fund against the surprise current monetary policy divergence.

1 Comment Play Taxicab Tenner: Allianz Global Investors' AA-rated Simon Gergel

Taxicab Tenner: Allianz Global Investors' AA-rated Simon Gergel

Our much anticpated new series is here! We hand a black cab driver a tenner and grill the manager of the 125-year Merchants trust until the meter runs out.    

Your Business: Cover Star Club

Profile: meet the duo at the heart of Hargreave Hale's succession plan

Profile: meet the duo at the heart of Hargreave Hale's succession plan

For the first time in the company's history a non-Hargreave is now at the head of the north west broker and asset manager

Wealth Manager on Twitter