Interactive Investor expands fixed income coverage

Interactive Investor expands fixed income coverage
(AP Photo/Richard Drew)

Investment platform Interactive Investor is expanding its fixed income coverage, saying bonds are becoming “more interesting”.

Lee Wild, head of equity strategy at Interactive Investor, said monetary policy tightening had triggered a sell off in bond markets which showed “no signs of slowing".

“The world has changed,” he said. 

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Wild highlighted the turbulent global market conditions currently spooking investors and said II wanted to ensure investors had “all the tools in their arsenal” to help them weather the turbulence.

II's fixed income push will include podcasts, infographics and analysis, as well as entry level content.

II will also cover money market instruments.

Rising inflation has led central banks to begin cycles of quantitative tightening in an attempt to control spiralling prices.

This has led to a rush out of bonds, whose yields have soared this year, with all fixed income categories seeing large outflows.

Some commentators have said this has made bond prices attractive as they have questioned how far yields can continue to rise.

Wild said though II had always covered the bond market, the platform would now “up its game”.

"It’s an ideal time to launch this project," he said. "As rates rise, we are conscious that people will be wanting a decent return for their cash.

"There’s also the possibility that some people might prefer the greater safety of bonds and money market instruments – especially as they can offer higher yields than traditional savings accounts. But good research is crucial."

Deputy collectives editor at Interactive Investor, Sam Benstead, said there was a crucial difference between bond investors and stock investors.

“Bond investors are worriers – they want to make sure that they get paid back when they buy the debt of companies or governments and that their income is not destroyed by inflation.

"On the other hand, stock investors concentrate on the ‘upside’ – predicting how much a company could grow in the future.

"This means that the bond market is hypersensitive to changes in the economic outlook. And boy is it worried at the moment."

However, he said there could be opportunities ahead, as corporate bond yields have shot up and now offer 4.5 per cent annual income on investment grade products.

He said: “Investors should interpret the bond market sell-off as a warning sign that economic pain is around the corner.

“However, the intensity of the bond market sell-off, even before interest rates have risen much, means that there could now be some value there for investors.  

“If inflation comes down next year, as it is likely to due to commodity prices stabilising or falling, then locking in a 4.5 per cent yield from a safe company bond may look like a savvy move, but good research is key.”