Fixed income has traditionally been a defensive investment for those who want a bit more caution in their portfolios. A conventional diversifier against equities, bonds tended to do well when equities were suffering, and vice versa.

But after nearly a decade of quantitative easing, which has meant central bank purchasing of fixed income assets (both gilts and corporate bonds), the typical 'fundamentals' of the market are not working.

The effect of QE on bond assets has depressed yields to such an extent that in some quarters they have become negative, which means investors have to pay to lend governments money. The big factor that will make yields rise, is if inflation rises, prompting interest rate moves by central banks.

Inflation in the eurozone is 2 per cent, and the UK is currently 1.8 per cent. However, there is unlikely to be a substantial move on interest rates in the near term, as inflation in Europe is not a symptom of an overheating economy, the usual instigator of a rise in interest rates.

It is with this conundrum in mind that Financial Adviser conducted research – in conjunction with Axa IM – to understand financial advisers' use of bonds. 

Generally speaking, their use remains fairly typical, with the need for diversification remaining the most popular driver of bond fund selection. track record of the fund manager is another important factor.

But financial advisers have proved themselves to be willing to embrace new trends. As the market in traditional, less risky income-producing assets has dried up, due to low interest rates and poor returns on cash, so advisers have turned to other income producing assets to satisfy their clients' needs.

High yield bonds, more conventionally described as "junk bonds", have gained respectability over the past few years. Part of this, admittedly, is because big name companies, that have historically been considered blue chip, might be going through a cycle of change, and their debt has simply been downgraded.

The vast majority of financial advisers in our research said they would be happy to consider a high yield bond for their clients, if that client suited the risk profile. 

Fixed income is an important, and reliable part of a client's portfolio. In this report, we investigate how exactly it is used.

Melanie Tringham is features editor of Financial Adviser