Important information

This website is for Institutional Investors in Denmark only.

If you are an Individual Investor click here, if you are an Financial Intermediary click here. Should you be looking for information for another location, please click here.

By clicking, you acknowledge that you have fully understood and accepted the Legal and Regulatory Information.

Capital IdeasTM

Investment insights from Capital Group

Categories
Fixed Income
How global corporate bonds can improve outcomes for UK investors
Peter Becker
Investment Director
Flavio Carpenzano
Investment Director

Investment-grade corporate bonds play a central role in a well-diversified fixed income portfolio, with the potential to generate attractive risk-adjusted returns. Many investors continue to maintain a preference for their domestic market when considering investment options.


However, investment strategies focused solely on one’s own domestic market may not be able to spread risk effectively. The potential diversification benefits of adding more markets and issuers to a portfolio are intuitive to most, highlighting the advantages of a global portfolio over regional strategies. This is illustrated in the efficient frontier analysis chart below. As can be seen, diversifying UK gilts exposure using global corporates rather than UK corporates not only increases potential expected returns, but also reduces volatility. This is due to the diversified nature of the global corporate market.


Efficient frontier analysis

Comparing hypothetical fixed income portfolios

Efficient frontier analysis

Past results are not a guarantee of future results
Selected assets include Sterling Aggregate – Corporates, UK Gilts, Global Aggregate – Corporates (GBP-hedged).
Monthly returns from January 2001 to 31 August 2023. Source: Bloomberg


Peter Becker is an investment director at Capital Group. He has 27 years of industry experience and has been with Capital Group for five years. Prior to joining Capital, Peter was a managing director in the fixed income product management team at Wellington Management. Before that, he was a portfolio manager at Aberdeen Asset Management. He holds a master's degree from The Ingolstadt School of Management. He also holds the Chartered Financial Analyst® designation. Peter is based in London.

Flavio Carpenzano is an investment director at Capital Group. He has 18 years of industry experience and has been with Capital Group for two years. He holds a master's degree in finance and economics from Università Bocconi. Flavio is based in London. 


Hear from our investment team.

Sign up now to get industry-leading insights and timely articles delivered to your inbox.

By providing your details you are agreeing to receive emails from Capital Group. All emails include an unsubscribe link and you may opt out at any time. For more information, please read the Capital Group Privacy Policy

Past results are not predictive of results in future periods. It is not possible to invest directly in an index, which is unmanaged. The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment. This information is not intended to provide investment, tax or other advice, or to be a solicitation to buy or sell any securities.

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. All information is as at the date indicated unless otherwise stated. Some information may have been obtained from third parties, and as such the reliability of that information is not guaranteed.

Capital Group manages equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organization; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.