How can I best buy gilts?

chrisfcarroll

I wanted to buy index linked gilts in 2022 but it seemed like I couldn't buy from gov.uk, or buy actual gilts from anyone. 

So I bought Income funds, one L&G and one Royal London. Since then the L&G has paid zero income. Belatedly I read the rest of the small print, and find the fund offers no promise of paying out the dividend income.

How can I buy best gilts for income?

wmb194

chrisfcarroll said:

I wanted to buy index linked gilts in 2022 but it seemed like I couldn't buy from gov.uk, or buy actual gilts from anyone. 

So I bought Income funds, one L&G and one Royal London. Since then the L&G has paid zero income. Belatedly I read the rest of the small print, and find the fund offers no promise of paying out the dividend income.

How can I buy best gilts for income?

They're listed on the LSE so a stockbroker that offers them e.g., AJ Bell, Halifax Share Dealing and its brands (iWeb, Lloyds and BoS brands), Hargreaves Lansdown. You can buy them via the Debt Management Office but it actually uses a third party stockbroker and so I wouldn't bother with that one.

https://www.dmo.gov.uk/

This site has good data for conventional and IL gilts:

https://www.yieldgimp.com/

Hoenir

What level of income are you hoping to achieve? Index Linked Gilts might not be an ideal product for this purpose. 

chrisfcarroll

Maybe I'm not looking properly, but on ajbell I couldn't see how to buy gilts, only gilt tracker funds and ETFs. Maybe the ETFs are more transparent and that would do?

( In 2022 I just thought : gilt prices have crashed, inflation might stay high for a while, I don't own any gilts, I should buy some index linked gilts now. )

Now in Jan 2025, I just want to know what I should have done/should do, to buy gilts for the yield. I guess I can sign up with the DMO's 3rd party.

wmb194

chrisfcarroll said:

Maybe I'm not looking properly, but on ajbell I couldn't see how to buy gilts, only gilt tracker funds and ETFs. Maybe the ETFs are more transparent and that would do?

( In 2022 I just thought : gilt prices have crashed, inflation might stay high for a while, I don't own any gilts, I should buy some index linked gilts now. )

Now in Jan 2025, I just want to know what I should have done/should do, to buy gilts for the yield. I guess I can sign up with the DMO's 3rd party.

I closed my account with AJ Bell so I cannot double check but you should be able to enter the gilt's ticker (epic) and buy it that way. If you follow the link to yieldgimp and look at first column in the table you'll see the LSE ticker code e.g., T26, TG30 and so on.

AJ Bell has a gilts page and a "buy" button: https://www.ajbell.co.uk/our-services/investment-options/gilts/prices

I'd avoid using the DMO's broker. In another thread someone said that it was a pain to setup, it's expensive and it doesn't offer real time quotes so you have no idea what price you're going to pay.

GeoffTF

I used to have an AJ Bell account and had no trouble buying gilts. I do not remember what I clicked on, and their website may have changed.

DRS1

I wonder what happens when you press the buy button for an Index Linked Gilt?  Do AJ Bell let you deal online?  For most ILGs at HL you have to call them because the price shown is not the price you have to pay - it excludes the indexation to date.

d6fs1l

chrisfcarroll said:

Maybe I'm not looking properly, but on ajbell I couldn't see how to buy gilts,

Just click deal and enter the relevant ticker (e.g. T33) and you can place an order.

DRS1 said:

I wonder what happens when you press the buy button for an Index Linked Gilt?  Do AJ Bell let you deal online?

It's the same as for conventional gilts. You place an order and it gets filled within a few minutes in my experience. All done online.

chrisfcarroll said:

How can I buy best gilts for income?

By not buying low-coupon gilts! All linkers have low coupons so they may not be appropriate for you if you need income.

GeoffTF

DRS1 said:

I wonder what happens when you press the buy button for an Index Linked Gilt?  Do AJ Bell let you deal online?  For most ILGs at HL you have to call them because the price shown is not the price you have to pay - it excludes the indexation to date.

With AJ Bell, I did not speak to a dealer. I placed an order (I think it was over the phone, but my last trade with them was five years ago) and it was executed shortly after. I did not know the price in advance. I was charged the online commission.

With iWeb, I used to be able to speak to a dealer and know the price before I traded, and pay the standard £5 commission. More recently, I entered the trade online, and it was executed as for AJ Bell.

With HL, I rang up and was put through to a dealer. He made the trade, but I was not told the price in advance. I was charged the online commission as per their website, but contrary to what I was told by the lady who answered the phone initially.

Trading is done at the clean price (which is the price shown on the London Stock Exchange website), and settled at the dirty price, which includes indexation and accrued interest.

DRS1

GeoffTF said:

DRS1 said:

I wonder what happens when you press the buy button for an Index Linked Gilt?  Do AJ Bell let you deal online?  For most ILGs at HL you have to call them because the price shown is not the price you have to pay - it excludes the indexation to date.

With AJ Bell, I did not speak to a dealer. I placed an order (I think it was over the phone, but my last trade with them was five years ago) and it was executed shortly after. I did not know the price in advance. I was charged the online commission.

With iWeb, I used to be able to speak to a dealer and know the price before I traded, and pay the standard £5 commission. More recently, I entered the trade online, and it was executed as for AJ Bell.

With HL, I rang up and was put through to a dealer. He made the trade, but I was not told the price in advance. I was charged the online commission as per their website, but contrary to what I was told by the lady who answered the phone initially.

Trading is done at the clean price (which is the price shown on the London Stock Exchange website), and settled at the dirty price, which includes indexation and accrued interest.

Yes it was the clean and dirty price issue which I thought was the reason HL would only deal by phone.  For the ones who allow it online is there some warning about the price differential - if not someone is going to get a shock especially if they try to buy a set quantity of the gilt rather than spend a monetary amount.

GeoffTF

DRS1 said:

GeoffTF said:

DRS1 said:

I wonder what happens when you press the buy button for an Index Linked Gilt?  Do AJ Bell let you deal online?  For most ILGs at HL you have to call them because the price shown is not the price you have to pay - it excludes the indexation to date.

With AJ Bell, I did not speak to a dealer. I placed an order (I think it was over the phone, but my last trade with them was five years ago) and it was executed shortly after. I did not know the price in advance. I was charged the online commission.

With iWeb, I used to be able to speak to a dealer and know the price before I traded, and pay the standard £5 commission. More recently, I entered the trade online, and it was executed as for AJ Bell.

With HL, I rang up and was put through to a dealer. He made the trade, but I was not told the price in advance. I was charged the online commission as per their website, but contrary to what I was told by the lady who answered the phone initially.

Trading is done at the clean price (which is the price shown on the London Stock Exchange website), and settled at the dirty price, which includes indexation and accrued interest.

Yes it was the clean and dirty price issue which I thought was the reason HL would only deal by phone.  For the ones who allow it online is there some warning about the price differential - if not someone is going to get a shock especially if they try to buy a set quantity of the gilt rather than spend a monetary amount.

I did get a shock when I first bought IL gilts with AJ Bell and complained that my account was showing a big instant loss. They fixed the problem. (Whether their valuations are precise is another matter.) iWeb refused to do anything. HL shows incorrect valuations online, but it does have a footnote saying that they are wrong. HL shows (at least more or less) correct valuations on their quarterly statements, but iWeb does not.