It's been a 30-year party for bond investors, but there are fears the hangover is about to kick in. Even bond fund managers admit that perhaps it's time for investors to grab their coats.
But before rushing for the exit, it is worth considering whether there is still some value left in bonds.
"Clearly we've had a three-decade bull market in bonds," says Tom Stevenson at Fidelity. "However, over the last few weeks the level of nervousness has gone up over bonds, due to the perceived early ending of 'quantitative easing' in the US."
The fear is, Mr Stevenson explains, the US government will cut its buying of bonds sooner rather than later, which will see the value of bonds plummet.
"But it is probable the market has become too worried about this, because the process of stopping quantitative easing will take some time."
Problems plaguing other economies also suggest there is some life left in certain types of bonds. If things take a turn for the worse, investors could opt for fixed income as a seemingly safer alternative to the more volatile equity markets.
"The global economy is too fragile to say it's the end of all bonds," says Nick Hayes, a bond fund manager at Axa Investment Managers. "Until the issues with Europe are sorted, no one is brave enough to go full-charge into equities."
Yet, even if these actions in the US and the troubled global economy support bond prices, this might not necesssarily mean you should go and buy now.
"Is there any value left in bonds? You have to search far and wide to find it, because the patient is in its death throes," says Chris Bowie, a bond fund manager at Ignis. "There is no life in bank bonds at the moment. If you invest in the wrong bank and they go bust, you could lose a lot."
As investors have been incredibly cautious since the crisis, a vast amount of fixed income has been bought, making it now look expensive.
"This is particularly the case with what are perceived to be the safest investments such as gilts and good-quality corporate bonds," says Patrick Connolly of Chase de Vere. "Rather than protecting investors' capital, there is a real danger that these 'safe' investments could fall significantly in value."
So much so, Mr Connolly believes it is an incredibly dangerous strategy to rely on bonds to protect your money and that they could even provide you with heavy losses.
In this regard, having some of your portfolio in bonds can still offer value, although you have to remember why you're investing as well as what types of fixed income you're getting.
"Most people should aim to hold a balanced and diversified investment portfolio which would usually include a combination of equities, fixed interest, property and cash," says Mr Connolly.
"There is still life in the bond market," says Darius McDermott, managing director of Chelsea Financial Services. "The problem is that bonds are coming to the end of a 30-year bull market and our concerns are more around capital returns than their ability to pay an income."
Mr McDermott recommends the strategic bond fund sector. "We definitely think that strategic bonds are the best choice right now as the managers of these funds have the flexibility to invest across all types of bond," he says. "Some fund managers are also using the extra tools they have in their box to limit the risks out there. Our favoured funds are Jupiter Strategic Bond and Artemis Strategic Bond."
"With inflation stubborn and above the Bank of England's 2 per cent target, bond markets are largely offering sub-inflation returns for UK investors," says Rathbones' David Coombs. "I like the Ignis Absolute Return government bond fund, for example. It can still potentially get returns but the bond market doesn't necessarily have to go up."
Mr Stevenson also prefers strategic bond funds, due to the level of uncertainty over which parts of the fixed-income market will fare better or worse. He says the Legal & General Dynamic Bond Trust and the M&G Optimal Income are two of a range of relevant funds that feature on the Fidelity Select list.
Yet, as always it is worth doing your homework, because as Mr Connolly points out, there can be large differences in how funds are constructed and run, even in the strategic bond sector alone. He said in this fund category, yields range from 1.2 per cent to 7.1 per cent, while performance over the past year was -0.6 per cent at one end, but 23.2 per cent at the other.
"While funds such as Legg Mason Income Optimiser, yielding 7.1 per cent, will focus on achieving the highest possible level of income and will invest in lower-grade and international bonds to do this, others, such as Fidelity Strategic Bond, yielding 3.1 per cent, will invest far more in better-quality bonds as it aims to preserve capital," says Mr Connolly. "We recommend Fidelity Strategic Bond, Henderson Strategic Bond, Kames Strategic Bond and M&G Optimal Income in client portfolios."
Although the bond party will no doubt end at some point, there could still be time to drink a little more from the punch bowl, if done with caution. Otherwise, you will end up with a nasty hangover.
Emma Dunkley is a reporter at citywire.co.uk