Corporate Bond Fund Risks – A consumer note from the FCA

The industry regulator has issued a puzzling statement about corporate bond funds.

In late July, the Financial Conduct Authority (FCA) published “some important considerations” for existing and potential investors in corporate bond funds. Quite what prompted the FCA to do so was not made clear: the Sterling Corporate Bond fund sector has been the worst seller in terms of net retail sales for six of the last twelve months according to the Investment Management Association.

The FCA spelt out three risk factors for investors to consider:

This trio of risks is well understood by bond fund managers, although naturally they have different views on their potential impact. This feeds through to the way in which their funds are managed. To quote the FCA again, “…it is essential to perform due diligence on individual funds to assess whether their investment strategies meet your requirements.”

Let us know if you think you may be affected.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.