The manager of a UK-listed corporate bond fund predicts there will be more defaults by issuers this year but says the sector now looks cheap as much credit pain is already priced in.

“Currently, we believe corporate bonds are inexpensive compared to any other period in history,” said Jim Cielinski, head of investment grade credit at Goldman Sachs Asset Management, managers of the Lincoln Corporate Bond Trust.

A number of strategists at wealth management houses have suggested increasing weightings to corporate bonds as they are likely to benefit from efforts by central banks to improve liquidity and credit market conditions.

“High quality securities, such as investment grade corporate bonds, are priced at levels that will allow significant upside potential in the event of an economic recovery, but will also provide greater protection against the many downside risks in the global economy at the moment,” he said.

The trust has been designed to generate income over the medium term and mainly invests in UK investment grade corporate bonds.

The fund was launched in 2001 and had £44.65 million of assets as at the end of January this year.