Question about Corporate Bond funds

Bondman

Hi, a newbie here and I'm just wondering if people agree with my analysis? My income portfolio has a higher percentage of equity based funds and trusts, such as City of London Investment Trust, however I also hold some bond funds; Royal London Sterling Extra Yield Bond, Henderson High Income and Invesco Bond Income Plus.

The value of these dropped as interest rates rose, so I am expecting them to rise as rates are forecast to fall. Is this a reasonable assumption? The good news is that they all continued to pay good interest/dividends, so the drop in capital value hasn't impacted me

ColdIron

To some extent yes, but don't forget that a lot of the drop in price was not due to higher interest rates but the widespread revaluation of bonds from historic over valuations for a decade or two during 22/23 and that won't 'spring back' to its 'rightful place' any time soon

BTW HHI is only about 10% fixed income so really a high yield equity fund at an 11% discount to NAV and that could prove sticky, not to mention the very high 23% gearing

masonic

I wouldn't have any great expectations of capital gains. The market didn't expect rates to rise when they did or as much as they did, and the market has been expecting rates to fall further and faster than they have, so what is already priced in?

Bondman

Thanks for the replies, I'll continue to collect the generous dividends and hope for a modest recovery!