Why pick investment grade corporate bonds?

Corporate bonds have certainly enjoyed a very strong run over the past year. However, given the extent of the downturn in 2008 as the credit crisis took its toll, the market has yet to come close to its historic highs. In 2008, against a backdrop of defaults and failures including the high-profile collapse of Lehman Brothers, the average yield spread above government bonds for the Merrill Lynch Global Corporate Bond Index peaked at the end of November at 4.97%. As governments worldwide stepped in to stabilise the financial system, investment grade corporate bonds began a protracted perio...