Gilts

Cash-Cows

My gilt index tracker has tanked by 9%. I thought it was supposed to be less volatile.

masonic

Presumably, your fund is tracking index linked gilts? This index has risen over 20% in a little more than 10 months and has subsequently fallen 10% in the past 6 weeks, so it is still up by over 10% over 12 months. A 10% drop is nothing compared with what equities can deliver.

bowlhead99

9% in an unspecified timescale is not a crazy volatile thing to happen considering the state of financial markets. The last month has not been good to the sector but the months leading up to the fall, had been.

Even after the fall, the average index linked gilt fund is 11%+ in the last year and 50% in the last five. Mainstream gilt funds are up 10%+ in the last year (between 1% for RL's short dated fund and 20% for Vanguard's long-dated one) and 30%+ in the last five.

Given inflation is low and base rate is 0.5% (has been since 2009) with small yields all around us, if you are investing in a fund that has been able to go up by 50% in five years you can see this is not coming from the interest yield alone and must be gains in capital price which can just as easily go back the other way. If you jump onto something that can move by 10-20% in a year you must be prepared for a change in direction from time to time.