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Gilt Portfolio Service
Investing in UK government bonds
What is a gilt?
A gilt is a type of ‘bond’ – bonds are essentially a loan that investors make to the bond issuer for a set time period.
Bond issuers can either be corporations or governments, however ‘gilts’ are specifically bonds that are issued by the UK government. By buying one, an investor is effectively lending money to the government for a fixed period, in return for regular interest payments and repayment of the original amount at ‘maturity’ (i.e. the date the loan is due).
About the Gilt Portfolio Service
This is a service that invests solely in gilts. The investment manager will create a portfolio of gilts (government bonds) – this can also be run alongside a standard investment portfolio.
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If you’d like to find out whether our Gilt Portfolio Service could be the right option for you, click the button below to request a callback.
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020 7600 1660What are the benefits of investing in gilts?Tax-efficient: A gilt (government bond) portfolio service will typically give the holder a much better total return than holding money in cash. Unlike money held in cash (and standard investment portfolios containing equities), any gains received in gilt portfolios are not subject to capital gains tax.
Low-risk investment: Suitable for risk-averse investors. If a gilt is held to maturity, then an investor purchasing a gilt is guaranteed to receive the redemption amount when the gilt reaches maturity.
Predictable returns: The return that the gilt will give at the point of redemption can be calculated exactly. This gives the investor certainty about the return they will receive from the gilt, and the date they will receive it.
High liquidity: Gilts can typically be easily sold if the investor requires them to be converted quickly into cash. This comes with the caveat that the price the investor receives for the gilt at the time of sale may be higher or lower than they originally paid for it.
Can be created as a secondary portfolio: A portfolio comprised solely of gilts can be run alongside a standard investment portfolio, to add a low-risk strategy to counterbalance a higher risk one.
Lower fees: The administration charge for running a gilt portfolio is typically lower than a standard investment portfolio.
Frequently Asked Questions:
Gilts are generally considered lower risk than many other investments because they are issued by the UK government. However, their market value can rise or fall before maturity.
Capital gains on UK government gilts are generally exempt from capital gains tax. Interest payments may still be subject to income tax, depending on your circumstances.
Yes, gilts can usually be sold before maturity, although the price may be higher or lower than the amount originally paid.
- Clients seeking capital security and wishing to minimise investment risk
- Investors wanting predictable income
- Those looking for tax efficiency
- Higher and additional rate taxpayers
- Those building diversified portfolios who want a low-risk fixed income component.