Best way to buy and own gilts as a retail investor

sgog

I was hoping that forum members could share their experiences in buying and holding gilts (and not gilt ETFs, as these require paying CGT on the gains).

In particular, it would be good to mention the following aspects (and any others that you find relevant):

• What are the costs of buying and holding the gilts (and, if applicable, withdrawing/depositing fees)?
• What are the offered products (e.g., does the platform offers linkers as well?)?
• Can you place dealing orders online, or do you have to make a phone call?

Johnjdc

My experience is that with 1-year yields at 4.2% and the CGT advantage from low-coupon gilts (as well as the ability to sell them in an emergency) I would be interested in buying a 1-year gilt as an alternative to a fixed rate savings account. However (online at least) the advertised spreads (e.g. on the 0.125% coupon gilt expiring at the end of January 2024) mean the AER falls from 4.07% if purchasing at the midpoint to more like 3.47%, in which case a SONIA MMF (selling before dividend day if you really want to dodge the tax) will return more. I haven't got as far as trying to press the button to see what price I am actually offered, or phoning to see if a better price is available. This is with HL.

sgog

Johnjdc said:

My experience is that with 1-year yields at 4.2% and the CGT advantage from low-coupon gilts (as well as the ability to sell them in an emergency) I would be interested in buying a 1-year gilt as an alternative to a fixed rate savings account. However (online at least) the advertised spreads (e.g. on the 0.125% coupon gilt expiring at the end of January 2024) mean the AER falls from 4.07% if purchasing at the midpoint to more like 3.47%, in which case a SONIA MMF (selling before dividend day if you really want to dodge the tax) will return more. I haven't got as far as trying to press the button to see what price I am actually offered, or phoning to see if a better price is available. This is with HL.

My understanding is that HL charges 1% for buying and selling gilts (capped at £50), which makes it quite expensive unless you're placing a sizable order.

OldScientist

sgog said:

I was hoping that forum members could share their experiences in buying and holding gilts (and not gilt ETFs, as these require paying CGT on the gains).

In particular, it would be good to mention the following aspects (and any others that you find relevant):

• What are the costs of buying and holding the gilts (and, if applicable, withdrawing/depositing fees)?
• What are the offered products (e.g., does the platform offers linkers as well?)?
• Can you place dealing orders online, or do you have to make a phone call?

I have some experience of holding individual gilts with iweb

Costs. £5 per bond transaction (both buy and sell) and the bid offer spread (this depends on the bond, the day etc. - but appears to be very roughly 1% or more. My intention is to hold them to maturity, so there are only costs for buying (I bought ones with 1/8% coupons, so reinvestment is not practicable for the amounts I have).

Products. They offer nominal and IL gilts (I currently only own the latter).

Dealing. Telephone only. In my limited experience, they obtained prices closer to the mid-point than I expected from the bid offer prices I was watching on the LSE (but that might just be because the prices were quite variable). I was pleased with their customer service, but probably wouldn't want to construct a 30 year bond ladder over the telephone!

Johnjdc

sgog said:

Johnjdc said:

My experience is that with 1-year yields at 4.2% and the CGT advantage from low-coupon gilts (as well as the ability to sell them in an emergency) I would be interested in buying a 1-year gilt as an alternative to a fixed rate savings account. However (online at least) the advertised spreads (e.g. on the 0.125% coupon gilt expiring at the end of January 2024) mean the AER falls from 4.07% if purchasing at the midpoint to more like 3.47%, in which case a SONIA MMF (selling before dividend day if you really want to dodge the tax) will return more. I haven't got as far as trying to press the button to see what price I am actually offered, or phoning to see if a better price is available. This is with HL.

My understanding is that HL charges 1% for buying and selling gilts (capped at £50), which makes it quite expensive unless you're placing a sizable order.

I think that's for phone deals which I wouldn't normally do, though some have mentioned that they get better prices - probably not 1% better!

sgog

Johnjdc said:

I think that's for phone deals which I wouldn't normally do, though some have mentioned that they get better prices - probably not 1% better!

Unfortunately, they write, "Most bonds, gilts, and PIBS can only be dealt over the phone."

Which gilts can be bought online?

Linton

sgog said:

Johnjdc said:

I think that's for phone deals which I wouldn't normally do, though some have mentioned that they get better prices - probably not 1% better!

Unfortunately, they write, "Most bonds, gilts, and PIBS can only be dealt over the phone."

Which gilts can be taught online?

I only know of 2 platforms where bonds can be traded online: II and HL.  Both only  support a limited number of bonds.  If you want something not on the list buying by phone is the only option.

I know that AJBell only have telephone tradnig and have seen no evidence that BestInvest offer bonds at all.

coyrls

OldScientist said:

sgog said:

I was hoping that forum members could share their experiences in buying and holding gilts (and not gilt ETFs, as these require paying CGT on the gains).

In particular, it would be good to mention the following aspects (and any others that you find relevant):

• What are the costs of buying and holding the gilts (and, if applicable, withdrawing/depositing fees)?
• What are the offered products (e.g., does the platform offers linkers as well?)?
• Can you place dealing orders online, or do you have to make a phone call?

I have some experience of holding individual gilts with iweb

Costs. £5 per bond transaction (both buy and sell) and the bid offer spread (this depends on the bond, the day etc. - but appears to be very roughly 1% or more. My intention is to hold them to maturity, so there are only costs for buying (I bought ones with 1/8% coupons, so reinvestment is not practicable for the amounts I have).

Products. They offer nominal and IL gilts (I currently only own the latter).

Dealing. Telephone only. In my limited experience, they obtained prices closer to the mid-point than I expected from the bid offer prices I was watching on the LSE (but that might just be because the prices were quite variable). I was pleased with their customer service, but probably wouldn't want to construct a 30 year bond ladder over the telephone!

I have had the same experience buying IL gilts from Halifax Share Dealing but at £9.50 per transaction.  Not surprising as it's the same service with different brands, perhaps we even spoke to the same dealer!

Johnjdc

sgog said:

Johnjdc said:

I think that's for phone deals which I wouldn't normally do, though some have mentioned that they get better prices - probably not 1% better!

Unfortunately, they write, "Most bonds, gilts, and PIBS can only be dealt over the phone."

Which gilts can be taught online?

The ones with a green "deal" arrow, I'm assuming?

https://www.hl.co.uk/shares/corporate-bonds-gilts/bond-prices/uk-gilts?column=maturity&order=asc

TheGreenFrog

HL have a good selection of conventional gilts which can be dealt online. Cost for me has been £11.95 per trade. Quoted prices are much closer to the mid price than the bid/offer spread you see initially. Interactive Investor have some available for dealing online - but I have done telephone dealing for others for the same commission as online (for me £5.99 a trade unless you are doing £100k or more!). Quotes nearer to the mid price as for HL. A friend has dealt gilts on iWeb for £5 a trade over the phone.

GeoffTF

It is only the new style index linked gilts that have to be traded on the phone. Conventional gilts and the few remaining old style index linked gilts can be traded online if your broker offers that (or the broker's traders can do it). Online gilt trades have much smaller spreads than the London Stock Exchange bid/offer prices. Large telephone trades (~£50K) have smaller spreads for new style index linked gilts (I have traded them with iWeb and Youinvest).