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You are here: Absolute Return Bonds Guide

Absolute Return Bonds Guide


Why consider an absolute return bond fund for clients?
In today's low interest rate environment, it is particularly difficult for clients who rely on the income from their savings to generate sufficient returns for their needs. The dilemma facing investors is how to obtain higher returns than those available on bank and building society accounts, without exposing their savings to substantially greater risk.
For clients who prefer a more cautious investment approach, bond investments have traditionally proved more attractive than equities, not only because they have tended to be less volatile but because they can also provide an attractive, regular income. However, in this low interest rate climate, even the yields on bonds are less appealing than they were. Absolute return bond funds represent an innovative solution to this problem.
Absolute return bond funds are likely to appeal to clients who would like to achieve better returns than from traditional cash deposits but with a fairly low risk approach. Even so, it is important for them to remember that there is still a risk of capital loss and volatility, and that unlike bank and building society accounts they may not get back the original amount invested and that some funds are not designed as alternatives to cash accounts.
Clients may even be able to invest in an absolute return bond fund tax efficiently through a stocks and shares Mini or Maxi ISA.

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.

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