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Issues remain with index-linked gilts

2 months ago
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A lot has changed in fixed-income markets over the last couple of years. Attention has been focused on headline yields available, which in some were at post-GFC highs throughout 2023. This attention was somewhat misplaced given that most bonds are nominal, and the yields had to be taken in the context of high inflation. Arguably one of the more interesting changes came in the index-linked market. After being negative for the better part of a decade real yields moved to positive throughout the entire curve in 2023 and, after a brief flirt with negative real yields around the turn of year, this remains the case in early 2024.

Download the whitepaper below to discover why:

  • Index-linked gilt yields rose rapidly from the lows of 2021
  • Earning this real yield isn’t straightforward for multi-asset portfolios, given the duration of passive and active implementations
  • Longer-term inflation expectations have fallen since the start of 2022 and present challenges for those looking to buy index-linked gilts directly


 

 

James Flintoft

James Flintoft

Head of Investment Solutions

James has over a decade of experience running MPS and managed accounts for intermediaries. After graduating from Northumbria University with a first class degree in Finance & Investment Management, James joined a regional DFM, where he most recently served as Head of Investments. He joined AJ Bell Investments in 2023 as a Fund Manager. James is a CFA charterholder.

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