Depending on your plans for your money − as well as how happy you are to take on investment risk for the possibility of better returns − you may be looking for investments which can offer you a more predictable income than riskier asset classes like equities. Under these circumstances, bonds may be just what you're looking for.
However, when you’re deciding how to invest, it’s important to remember that the value of the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested.
Unfortunately we’re not able to give any financial advice. If you’re at all unsure about the suitability of your investment, please speak to a financial adviser.
As we’ve already noted, bonds are usually considered more predictable and less risky than equities. When you buy a bond you're effectively giving a fixed-term loan to the government or company that's issuing it:
When you invest in bonds, you'll receive an income in the form of regular interest payments (these payments are known as the 'coupon') from the government or company which issued the bond. The coupon amount is agreed when the bond is first issued, and won't usually change.
On the day that the bond expires, known as the 'redemption' or 'maturity' date, you'll usually get your original investment back. But just because you buy a bond, it doesn't mean you need to hold it until the redemption date.
Just as a company's shares can be bought and sold on the stockmarket, bonds can also be traded throughout their lifetime, and their prices will change as they're bought and sold on the open market.
When you invest in a bond fund, your money is pooled with other investors, and you're also invested in a wide range of bonds with different coupons and redemption dates. This diversification helps to reduce your investment risk, because you're not relying on the fortunes of a single government or company.
M&G launched the UK's first corporate bond fund in 1994 and we've been leading the way in bond market investing ever since.
Our bonds team has shown the ability to make the right decisions in different market conditions over the years (including minimising our investments in some eurozone countries before the European debt crisis).
Today we're one of Europe's largest bond fund managers, with over £169 billion invested in fixed income assets.*
With myM&G, we're making it simpler and more straightforward than ever for you to invest your money across the whole spectrum of bond investments.
To see our full range of bond funds, click here and select Fixed Income in the Asset class filter
* As at 30 June 2019