Читать книгу The Sterling Bonds and Fixed Income Handbook - Mark Glowrey - Страница 5

This is a timely book. Bonds have been rather overlooked by investors in recent years but this is changing as portfolio strategies adapt to our evolving needs and the rapid alterations in global markets. Like many readers, I have accumulated a fair collection of investment books on my shelves but none of them offer a thorough guide to bonds and fixed income instruments. I suppose they have not been seen as particularly sexy: after all, notwithstanding the Eurozone sovereign debt crisis, it is the equity markets which tend to make the news with their “thrills and spills” as the author puts it. And yet, increasingly, bonds are once again playing a crucial role in our investment planning, whatever our objectives might be.

Almost all portfolios can find a place for fixed income, if only as an alternative to cash. After all, returns are usually better, risk can be managed and it is possible to buy liquid bonds which can be sold when funds are required. But there is no need to stop there. Traditional asset allocation is all about balancing equities with bonds and the inclusion of fixed income is a tried and tested way of reducing portfolio volatility. With so much emphasis on equity returns, reducing volatility has been the primary function of fixed income. This is the life stages approach to investment management where we accept greater risk when younger but attempt to reduce volatility, and therefore uncertainty, as retirement approaches. As such, those with a longer investment horizon have been attracted primarily to shares. Portfolios must always be adaptable and over time this changes. During the decade or so prior to retirement, a rebalancing should take place which re-allocates assets away from equities and towards the dependability of bonds. During such an investment stage, and beyond into retirement, the predictability of bonds provide for precisely the sort of returns that are demanded. It is old advice but good advice.

There is, however, much more to bonds than simply managing portfolio volatility. Mark Glowrey will surprise many readers of this book when he demonstrates that in historical analysis, the performance of bonds compares really rather favourably to equities. Even pedestrian British government bonds, gilts, have outperformed UK shares over the first decade of this new century. It is the sort of statistic to make all investors reappraise the merits of fixed income. Bonds are not only about lowering risk, they can also be about long term growth and even speculative investments.

Profits are, not unreasonably, what most investors are interested in. But profit has come to mean capital gains. However, even when it comes to shares, most of our longer term returns will actually derive from income rather than capital growth. As such it is one of those mindsets as investors we must learn to shake. Total returns of income combined with capital are what count and this is what bonds and fixed income can offer. For the longer term, more passive investor, income is perhaps more readily available from these products than great capital gains. Also, depending on one’s tax position, this can be eaten up by income tax. But it is worth considering that you are not liable for capital gains tax on profits from gilts and increasingly tax efficient wrappers are being employed to manage taxation.

The combination of Individual Savings Accounts (ISAs) and Self invested Personal Pensions (SIPPs) have helped to make investment portfolios as tax efficient as possible. Within these wrappers, investment choice is relatively free, profits can be taken CGT free and no additional income tax is due. This makes the selection of bonds and other fixed income products an even more attractive proposition and means that investors need not distinguish between income and capital returns.

Not only is this book timely, I cannot think of a bond expert more trusted or more in tune with the needs of private and professional investors than Mark Glowrey. His analysis is always insightful and always makes for better investment decisions. Those skills are brought to bear in this book and it makes for a dependable volume of which I for one will take full advantage.

I am sure that a new era of bond investing is upon us and that portfolios of every type and size will be all the more successful for the inclusion of fixed income. You have picked up this book and that means that you see the potential of this asset class to help fulfil your objectives. I’m convinced that readers of this guide will build better portfolios.

Dr Stephen Barber