Corporate Bonds

Corporate Bonds are loans to a company from an investor. Companies typically issue them and they generally offer the lender a fixed interest payment, from 0.25% to 2% above the yield on an equivalent Gilt. The interest yield is fixed by the issuer and is paid annually or half-yearly. Once issued a Bond will trade in the market, but its price movement will be limited by its life-span and known redemption value - i.e. the repayment of the original loan. Bond funds will not typically hold on to Bonds until redemption, so capital values on a Bond fund cannot guaranteed. Corporate Bonds are relatively low-risk because the issuer must pay the interest ahead of any shareholder's dividends. In the event of company failure, the Bond must similarly by paid ahead of shareholder's claims.

Investment Warning:
Past performance is not necessarily a guide to the future and the value of units, and the income provided from them, can go down as well as up. You are not guaranteed to get back your original investment at any time.