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It has been a stomach-churning few days for UK bond markets - think of a rollercoaster, but without the bits that go up.

Last week chancellor Kwasi Kwarteng went full supply-side, plunging the pound to near parity with the dollar and sending gilt yields soaring.

It’s certainly been an interesting few days for bond investors.

However, nestled in a sub-sector of the bond market is an area that a few DFMs have been increasing their exposure to.

According to our database, allocations to high yield short duration bond funds have risen from 1.6 per cent to 2.1 per cent in the past few months.

For Ian Brady, WH Ireland's chief investment officer, the beauty of short duration bond funds is that by their very nature they are self-liquidating.

This has two benefits: firstly, it allays fears of capital loss, and secondly means the managers receive regular proceeds which can be invested at higher rates, boosting returns.

"Even if rates go higher, [the fund’s managers] have the opportunity to invest at higher interest rates," he said.

Another benefit is that the shorter duration of these bonds allows managers to protect the fund from any liquidity issues which rising investor redemptions could cause.

However, this protection against liquidity issues only goes so far.

One of the risks to these assets is if there is a sudden outflow from these bonds, Shaun McDade, portfolio manager at Ravenscroft told us.

If there is a lot of hot money flowing around, it could spell bad news, he said.

"I'm not saying there is [currently], but if there’s a mass exodus from the asset class, the liquidity profile of these bonds can suffer significantly," he said.

The other risk in McDade's mind is if the global economy enters a big downturn, as the heightened risk of defaults this would inevitably cause would be bad news.

The Royal London Short Duration Global High Yield Bond fund is held by two DFMs in our database, and some DFMs have told us the managers' longevity plays a factor here.

But according to our database, the £844mn Axa US Short Duration High Yield fund is the most popular high yield bond fund after having been bought by several DFMs in recent months. It is now held by five DFMs in our list.

High yield bonds aren’t designed with the faint of heart in mind but, in the current climate, few assets are built for recreation, so it may be that high yield bonds have a moment in the sun, even if it is the chilly autumnal sunshine.

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