Any views on the relevance of Gilts in a modern portfolio?

username12345678

I've gradually moved away from government bonds and in to cash for the defensive part of my pf.

The non-equities element is there to enable me to achieve an acceptable level of risk....why would I want to expose myself to capital losses for little or no return?

Makes no sense to me.

Iain_For

thrifty_pete wrote: »

Are Gilt / Government Bonds (and the funds made up of them should you invest that way) really something for someone willing to buy and sell to try to beat the rates on savings banks accounts? Perhaps akin to individual shares rather than simply owning a tracker fund?
I have an equity portfolio (shares and global tracker funds) and my diversification is simply fixed rate savings account (cash). Do I need to bother with Government bonds at all?

Of course, bond yields have not always been this low so I guess depends on your time horizon. Roughly half the bonds I hold are in a global bond tracker that had returns that easily beat cash until 2016, return on Gilts was even higher in that time frame. The bonds are there to reduce volatility and provide a currency hedge, not really expecting them to drive overall returns on my portfolio. As yet, I can't see a tax efficient way of getting a return on cash better than inflation.

A_T

Iain_For wrote: »

Of course, bond yields have not always been this low so I guess depends on your time horizon. Roughly half the bonds I hold are in a global bond tracker that had returns that easily beat cash until 2016, return on Gilts was even higher in that time frame. The bonds are there to reduce volatility and provide a currency hedge, not really expecting them to drive overall returns on my portfolio. As yet, I can't see a tax efficient way of getting a return on cash better than inflation.

Yes L&G All Stocks Gilt Index fund is 4.8% annualised for the last 5 years. Of course we're consistently told this is all about to end but then we're also told that the stock markets are about to crash.

Gilt index funds remain the great diversifier from equities. When equities were distressed early this year UK Gilt Funds were the best performing IA sector for a 3 month period.

thrifty_pete

The ISIN for the L&G fund is GB00B8344798 I think. I might put some of my next ISA tranch into it so see how it performs.