The Sterling Bonds and Fixed Income Handbook
By Mark Glowrey
The global market for bonds is far larger than that for stocks. And with central bankers so deeply entrenched in bond markets through quantitative easing (QE), it has perhaps never been more important to understand what’s going on in the market. The trouble is many people, including many investment professionals, who are very comfortable with equities, have only a vague idea of how bonds work. Mark Glowrey’s The Sterling Bonds and Fixed Income Handbook: A Practical Guide for Investors and Advisers aims to fix that – and it does an excellent job.
The first third of the book deals with basic definitions, including concepts such as ‘yield’. Glowrey keeps the maths to a minimum, so if you’re looking at bonds for the first time, or need to refresh your memory, this book is a suitable starting point. However, it’s by no means just for beginners.
Glowrey goes on to look at the wide range of fixed-income securities available, ranging from gilts (UK government bonds) to more complex areas, such as distressed debt and index-linked bonds. Even when he moves on to the more exotic offerings, he keeps his explanations comprehensible, avoiding the trap of turning the text into an alphabet soup of acronyms. He also makes it quite clear that investors who stray from more well-worn paths do so at their own peril: “if you don’t understand it, don’t buy it”.
After discussing the “why” and “what” of bond investing, the book concludes by looking at “how” private investors can go about building a bond portfolio. Given that most bond books are written from the perspective of the US investor, it is refreshing to see a discussion on minimising your bill to HM Revenue & Customs, not the US tax office. The book also looks at diversification and charting (technical analysis). Other useful features include a list of further reading and even a discussion of software ‘apps’ available to perform some of the more complicated calculations.
Glowrey is an engaging writer with a warm and friendly tone. Of course, his day job (as head of retail bond sales for Canaccord Genuity) means he wants to encourage as many people as possible to get involved in bonds. So you won’t find much about ‘financial repression’ or concerns about a bond bubble.
Another big omission is his failure fully to explain the difference between the RPI and CPI inflation measures, especially given how important the difference between the two is when it comes to the index-linked gilts market. But as an introduction to an often poorly understood market, it does its job admirably. High-profile bond fund manager Jim Leaviss of M&G describes it as “an excellent guide” to Britain’s bond markets, and I’d have to agree.
• The Sterling Bonds and Fixed Income Handbook: A Practical Guide for Investors and Advisers by Mark Glowrey. Published by Harriman House (£18.99).
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