Managed Bonds

Managed bonds - but beware of the risk. Managed bonds means putting your investment into the hands of a skilled (you hope) fund manager, who invests money in different companies on your behalf.

This type of bond fund regularly offers investors a choice of defensive, moderate risk, or higher risk fund choices. Income can be taken from the bond, however if the value of the investment falls in line with whatever stock market investments the bond is invested in, then your original capital can be rapidly eroded. This class of bond product relies heavily on its success for good stock market timing, which even the most experienced stock market investor can struggle with.

 

Some fund-of-fund options can be common, meaning your money is distributed across a spread of different fund managers. But these investments can often be liable for double charging i.e. the fund-of-fund charging you a fee, plus a fee for whatever individual funds you are also invested in within the fund-of-fund wrapper. Charges can really make a big dent on overall investment performance in the long-term, so do check. (It might pay you to see if you can negotiate lower charges on your investment, especially if you're investing through an independent financial adviser.)

Be advised that a managed bond fund is a significantly riskier product than conventional bond funds - especially compared with capital-protected bond products - and are only for those who can comfortably afford to take the risk.

Are you making the most of your ISA limit this year? For the current best performing ISAs, visit us at www.Investments.co.uk/Financial_Investments/ISAs

 

UK Investments - Financial, Property & Other Investments - 1998-2008

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