406. Century bonds, AI debt and the case for staying short

Capital preservation can be just as important as income when investing in bonds. Our interview with Jerry Wharton, manager of IFSL Church House Investment Grade Fixed Interest, examines how a defensive investment-grade bond strategy seeks to preserve capital while providing dependable income for clients. The discussion covers the importance of credit quality, short duration and avoiding the temptation to chase yield through lower-quality or excessively long-dated bonds. It also explores volatility in the gilt market, attractive new sterling issuance and growing concerns around debt issued by major US technology companies. Finally, the conversation considers the difficult outlook for UK inflation and interest rates, before explaining why current sterling investment-grade bonds may offer an appealing combination of income and capital upside for cautious investors today.

What’s covered in this episode

• Capital preservation in bond portfolios
• Income without chasing yield
• Why credit quality matters
• The fund’s AAA allocation
• Managing interest-rate sensitivity
• Lessons from the 2022 bond sell-off
• Volatility in long-dated gilts
• Government borrowing concerns
• Attractive sterling bond issuance
• Heathrow’s recent bond
• Hyperscaler debt risks
• The danger of century bonds
• AI spending and corporate liabilities
• UK inflation pressures
• The outlook for interest rates
• Income and redemption upside

Learn more on fundcalibre.com

Please remember, we’ve been discussing individual companies to bring investing to life for you. It’s not a recommendation to buy or sell. The fund may or may not still hold these companies at the time of listening. Elite Ratings are based on FundCalibre’s research methodology and are the opinion of FundCalibre’s research team only.