For many investors, the market turmoil had them caught between a rock and a hard place – shares were just a little too unpredictable and risky, but moving their money into savings would have meant accepting low interest rates.

It is not surprising, then, that many turned their eyes towards gilts and bonds. While not as safe as cash, they can be considerably safer than equities.

The problem for a lot of investors, however, is choosing the right gilt or bond to buy into. For a start, just looking at the number of companies that have gone under in the last 18 months might scare some people off buying corporate bonds.

Whilst yields on gilts have improved considerably in recent months, getting your head around the one that is right for you can be complicated as the value of gilts and bonds can go down as well as up.

We should not get too hung up on the recent market volatility, however. Gilts and bonds have, for a long time, been the staple diet of investors looking for income and a popular way of getting access to them is through funds.

Doing it through funds

Saying that using funds is popular is actually something of an understatement. According to the latest statistics from the Investment Management Association (IMA), Sterling Corporate Bond funds have been the best-selling funds every month from November 2008 to June 2009.

And gilts are not far behind either. For June 2009, they were the third bestselling type of fund, behind UK All Companies in second.

The reasons for buying into funds that hold gilts and bonds are the same as for buying any funds – primarily because you get the expertise of the fund manager who uses his knowledge to select what goes into the fund (and its maintenance) and there is instant diversification because of the holdings in the fund.

Each classification has strict rules about what percentage of holdings need to be held in gilts and bonds, so you can generally be sure that risk is kept to a minimum – something that many investors are looking for, particularly as it can help aid confidence in their portfolio.

What’s more, as you can see, you can also get access to non-UK bonds, giving you some geographic diversification as well.

To find out more about the funds that are available, log in to your Barclays Stockbrokers account, select Funds Market, then Funds Research followed by Funds Factsheets and select one of the IMA sectors from the search menus.