By Iona Bain 

Some of the most high-profile bond funds in the UK, including those investing in corporate bonds or aimed at securing income, have underperformed consistently in the last three calendar years, new research suggests.

The data from FE Trustnet shows that 14 funds in the three UK fixed interest sectors failed to beat the sector average in each individual year from 2008 to 2010.

These sectors - IMA Sterling Corporate Bond, IMA Sterling Strategic Bond and IMA Sterling High Yield Bond – are touted as less risky areas to invest in than specialist funds or single company shares. Corporate bonds allow you to lend to companies in return for an IOU and you should be paid a fixed rate of interest over time. Strategic bonds and high yield bonds work on a similar basis, only they lend money to companies perceived to be higher risk.

Yet the returns from many big names in this sector, such as L&G High Income, Standard Life Corporate Bond and Standard Life Higher Income, have not matched their peers in the last three years.

A spokesman for Standard Life told FE Trustnet: "As a result of our focus on quality and concerns about further macro economic difficulties, our credit funds were slow to re-risk in 2009 therefore missing out on some of what proved to be a substantial rally".

He added: "Conversely, the performance of these funds was strong relative to our peers in 2008. Recent years have presented challenging market conditions and although some of our funds have suffered over the short-term we remain committed to providing exceptional long-term investment returns to investors."