So-called safe havens, such as government bonds, have seen their yields move continually lower, while credit has provided healthy returns but also endured the occasional sell-off.

In the build-up to the EU referendum it seems many investors once again sought out the perceived stability of bond funds, with the Investment Association (IA) recording net retail sales into fixed income of £315m in May, compared with outflows of £439m from equities.

Guy Sears, the IA’s interim chief executive, says: “Fixed income funds were the most popular among UK investors in May as they looked to lower their risk exposure ahead of the EU referendum. It was by far the best-selling asset class as a whole, as well as taking up three of the five top-selling sectors. The sterling corporate bond sector attracted the highest net retail sales while sterling strategic bonds and gilts were fourth and fifth respectively.”

Positive flows continued in June, despite the flight from a number of other asset classes, and fixed income returns were healthy in the wake of the vote. From June 23 to July 19, all five IA fixed income sectors delivered positive returns, with four of these – IA Global Emerging Market Bond, Global Bonds, Sterling Corporate Bond and Sterling Strategic Bond – outperforming the popular IA Targeted Absolute Return sector.

We haven’t seen the Armageddon scenario people had perhaps been concerned about in credit markets. Adrian Hull, Kames Capital

In spite of the rebound in popularity, however, one sticky issue is liquidity, with some investors concerned about bond markets – particularly given the European Central Bank’s (ECB) bond-buying programme, which has recently been extended to the corporate sector of the market.

Adrian Hull, fixed income product specialist at Kames Capital, says: “Given the new push lower in government markets both in the UK and in Europe, one of the liquidity issues that’s very relevant in Europe is the corporate bond purchases programme, but particularly the government bond purchases programme is getting to the stage when it’s almost going to be unimplementable.

“There are now only 19 bonds in the German bond market that the ECB can go and buy, because all the other bonds yield less than 40 basis points. There will come a time that actually [ECB president] Mario Draghi wants to keep on his policy of buying government bonds, [but] he physically can’t buy bonds in Germany that yield more than -40 basis points. That’s one nuance that has come out of the significantly lower government bond yields.”

The EU referendum result has also made things tricky for bond investors. Mr Hull says that as the currency markets, like most others, had not priced in a Brexit vote, this “has made the market thinner, certainly in terms of government markets”.

But he adds: “Credit markets have behaved pretty well. I think people have been surprised they have been as sanguine as they have. I think from a global market perspective, you could stand back and say liquidity has been OK. We haven’t seen the Armageddon scenario people had perhaps been concerned about in credit markets. Clearly Friday and Monday [after the vote] were the worst days and we’ve come back from a risk perspective since then.”

With monetary and perhaps fiscal stimuli on the agenda in the UK, and elections in various European countries in the next 18 months, the outlook for fixed income continues to look finely balanced.

Nyree Stewart is features editor at Investment Adviser