1 Source: DataStream, BlackRock. The yield on cash is represented by 3 month LIBOR (GBP), UK government bonds by 10 year gilts, global equities by MSCI AC World Index, European equities by MSCI Europe Index, UK equities by FTSE All Share Index, UK corporate bonds by Barclay Sterling Aggregate Index and global high yield dividends by MSCI World High Dividend Index. Yield shown as at 31.08.2012.
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Investments in fixed interest securities such as corporate or government bonds pay a fixed or variable rate of interest and behave similarly to a loan. These securities are therefore exposed to changes in interest rates which will affect the value of any securities held. Companies which issue higher yield bonds typically have an increased risk of defaulting on repayments. In the event of default, the value of your investment may reduce. Economic conditions and interest rate levels may also impact significantly the values of high yield bonds. Under certain market conditions, liquidity in bond markets may fall significantly without warning. Therefore it may not be possible to sell a security at the last quoted price or at a value considered to be fair. In extreme market conditions, it may be difficult to realise your investments. Over 35% of certain mutual funds may be invested in securities issued by any one government; therefore if these investments decline in value, this will have a pronounced effect on the overall value of each fund.
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