FCA warns over corporate bond fund risks

Corporate bonds have been among the better performers in markets this year, with the average fund in the IMA Sterling Corporate Bond sector returning 5.5% over a year to 24 July. However, the asset class has come under scrutiny over the past couple of years amid concerns about liquidity, and more recently over the risks of investing in contingent covertibles (CoCo) and Tier 1 bank debt. In a notice published by the FCA on 25 July, the regulator highlighted the ongoing liquidity risks facing the sector. "[Corporate bond] funds are not risk free and the risk factors associated with t...