Bond funds sector review – are we near peak interest rates?

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Published on 10 November 2023

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

Interest rate rises have slowed. Current rates in the UK, US and Europe seem to be near their peak. But government bond yields have continued to rise.

Here’s why and what this could mean for bonds.

This article isn’t personal advice. If you’re not sure whether an investment is right for you, ask for financial advice. All investments and any income from them can fall as well as rise in value, so you could get back less than you invest. Yields are variable and not a reliable indicator of future income and past performance isn’t a guide to the future.

Past performance isn’t a guide to the future. Source: Lipper IM, to 31/10/23.

Government bonds have continued to underperform compared to corporate bonds over the quarter. This has largely been driven by a market acceptance that while interest rates might be near their peak