"We might not yet see the government printing money till Q1, 2011 but it can't be ruled out as the BoE looks to pump some life into the system while reducing the deficit," said Juliet Schooling, head of research at Chelsea Financial Services.
"Clearly the big fear for savers and investors alike is the spectre of rising inflation which is associated with quantitative easing (QE). Inflation will arise by the hand of QE if there is too much money chasing too few products and services. Clearly in a slump, as is the case now, this can be a scenario.
"Should this happen, investors will see their rates of return eroded, since the return of capital will not have risen with inflation, while cash sitting in the bank will deliver a negative rate of return to investors. In this case, investors could look to inflation-linked bond products such as the recently launched M&G Inflation-Linked Corporate Bond."
In addition, options for investors looking for fixed income include the top five fixed interest performers across all sectors according to Trustnet.
Top five fixed interest funds
| Fund | Year-to-date return % |
| GLG Treasury Plus Corporate | 19.2 |
| Investec Emerging Markets Debt | 19.1 |
| UBS Long Dated Corporate Bond UK Plus K Gr Acc | 17.5 |
| Baillie Gifford Emerging Markets Bond | 16.8 |
| Old Mutual Corporate Bond | 16.8 |
Source: Trustnet.com data to 6 October 2010
Emerging markets debt as a theme may startle some investors. For those considering such an investment for the first time it will help to ascertain just how it differs from an investment in other more traditional developed world bonds.
"Emerging market debt offers higher potential returns than traditional global bonds, thanks to the higher yields and the underlying structural convergence of emerging markets to developed status," said Peter Eerdmans, manager of the Investec Emerging Markets Debt fund.
"As such, we would place emerging market debt in the high income/return generating portion of an investor's portfolio, whereas developed market bonds are more typically used to add safety and liability-matching characteristics to the portfolio. That said, investors would need to bear in mind that many commentators currently challenge this traditional 'safety' of global bonds due to the very high debt levels in developed markets. In that sense, one could argue that an allocation to debt issued by emerging markets currently looks much safer in comparison with developed markets - probably more so than at any time before."
Eerdmans said the volatility of local emerging market debt is only slightly higher than global bonds, whilst the correlation is quite low.
"This, we believe, makes local emerging market debt an excellent addition to a global fixed income portfolio," he said.
For the retired or retiring investors there are acceptable reasons why they should look to the emerging market debt sector according to Gordon Brown, fund manager of the Baillie Gifford Emerging Markets Bond fund:
"These are fixed income investments with an average credit rating of BBB, that is, investment grade, so will provide a steady income stream and some scope for capital appreciation with negligible probability of default," said Brown.
"Default is extremely unlikely in local currency bonds as countries control the supply of their own currency."
Regionally Brown highlights Asia and Latin America for robust growth, solid fiscal positions and strong capital inflows.