Are bonds too expensive? Fund manager's tips on how to invest in the fixed income minefield

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Fixed income has been a tough place to be invested over the past five years, with mainstream equity markets making impressive gains 

This is especially true of developed market government bonds, many of which pay a yield that is below inflation or even in some cases negative - meaning holding them will effectively lose you money.

So do bonds look too expensive at the moment, relative to the amount they yield? David Roberts, head of fixed income at Kames Capital, thinks so. 

However, he also suggests the lack of opportunity for investors to earn an income in other asset classes means bonds will continue to see strong demand because of their ability to produce a steady yield. Roberts gives us his thoughts on how to invest in bonds in the videos below.

There has been quite a lot of negative sentiment around emerging markets as slowing economic growth, slumping commodity prices and lack of liquidity have all prompted investors to look to other parts of the market. 

However, Kames Capital is quite positive about emerging market debt, which it thinks can form an important part of your portfolio.

Because the fortunes of emerging markets are so intertwined with commodities, to invest in the region is also to take a bet on whether the outlook will improve for that asset class. 

And due to the many different factors having an impact on the region, Roberts warns prices could go up - and down - in the short term.

The world is facing mounting political uncertainty in the run-up to the US election and Britain's EU referendum.

These question marks mean that investors are flocking to safe haven assets such as bonds, which tend to be lower risk and less volatile than other asset classes such as equities. 

The fixed income team at Kames is currently favouring corporate debt, which it conversely expects to benefit from stability in economic conditions. 

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