I have a client and I know that their portfolio is currently under-exposed to corporate bonds. However, I feel reluctant to put their money into an asset class that looks highly valued, purely for diversification purposes. What should I do?
BEn YEarsley, Hargreaves Lansdown I wouldn't put it in. Why not leave it in cash? Cash is giving you 4.5%, while investment grade corporate bonds are only giving you 5.5%. You are getting a tiny bit less on the reward, but you're not taking any risk for it. You can then use any dips in the market as a buying opportunity. This could be when interest rates rise, which they are likely to do over the next year or two. If you think something is over-valued, I don't know how you would justify putting it in a client's portfolio. How can this be "Treating Customers Fairly"? Cash should be an ...
To continue reading this article...
Join Professional Adviser for free
Signup and gain exclusive members-only insights
- Unlimited access to real-time news, industry insights and market intelligence
- Stay ahead of the curve with spotlights on emerging trends and technologies
- Receive breaking news stories straight to your inbox in the daily newsletters
- Make smart business decisions with the latest developments in regulation, investing retirement and protection
- Members-only access to the editor’s weekly Friday commentary
- Be the first to hear about our events and awards programmes
