The fund manager told Third Sector that the combination of rising inflation, the impact of the financial uncertainty of the summer and changing government priorities had put increased pressure on bond pricing, leading to a fall in returns over the long term.
According to CCLA, there has been a sharp change since the peak in bond prices in 2005/06, which was caused by a flow of cash from pension fund and insurance company investors. But now that those investors have increasingly turned towards alternative assets, the demand for bonds has moderated.
There are also indications that the US sub-prime mortgage crisis will drive up interest rates in the UK and the rest of Europe. Rising interest rates are bad for bond markets because bonds themselves fall in value.
"Recent market instability has centred on equities rather than bonds and understandably that is the area that has captured the headlines," said James Bevan, chief investment officer at CCLA. "But it is very important that investors do not overlook the fact that, in a period of change, all areas of investment markets will be affected.
"Charities uncertain of their position should seek advice from their investment fund managers to reduce their exposure, review their allocations and focus on alternative assets."