UK bonds were 2011's top asset as investors turned to safe havens
British bonds performed well in 2011, despite the shaky start to the national and global economic recovery.
According to Lloyds TSB Private Banking, despite turmoil in the eurozone, investors benefitted from an average return of 13.5 per cent in UK bonds last year.
This is an astonishing turn up for the books and means that UK bonds offered the best returns in their asset class not for just 2011 - but since 1998.
Economic turmoil was the key reason for investors to plough money into government-backed bonds, but the performance of British assets was more than double that offered by international bonds, which showed an average return of just 5.7 per cent.
Suren Thiru, economist at Lloyds TSB Private Banking, said: "Last year proved to be a particularly turbulent period for investors against a backdrop of increasing pessimism."
"UK bonds provided the best returns in 2011, reflecting the flight to safe haven investments that has characterised the past 12 months. Gold, which is viewed as the ultimate safe haven investment, also performed well," Thiru added.
The avoidance of riskier assets - such as equities, commodities and investment in emerging markets - is likely to continue if a solution to the eurozone debt crisis is not forthcoming.
This could cement UK bonds' reputation as a safe investment vehicle in the coming year.
The next best performing investment was UK commercial property, which saw returns of 7.6 per cent, followed by international bonds and UK residential property. However, UK Bonds were the only vehicle to offer double-digit growth.
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