Fixed income has become a popular source of income - an asset class that offers reliable income in a period of uncertainty. A huge amount of money has been invested into bonds so that bond prices have seen a massive rally in recent years.
However, the prospect of rising interest rates means that pressure could be placed on the bond markets, raising fears of dampening prices.
Strategic bond funds are one option that investors may prefer in times of uncertainty. While investing in conventional corporate bonds, strategic bond funds have more flexibility in order to achieve their returns, including investing in high yield bonds.
Strategic bond funds can also use derivatives and mix up the duration of the bonds they invest in. Here we outline the options.