UK Government Bonds on Fidelity

LateStarter

I'm (hopefully) within 2 years of retirement, so looking to de-risk, and government bonds are an option I'm considering. I have a SIPP with Fidelity, but can't find gilts on their platform (google search hasn't helped)

Does anyone know if Fidelity supports gilts? How to find them?

Thanks

OldScientist

You're probably best off asking their customer support (who I found to be very good when I still had an account with them). However, they did not offer individual gilts when I was still with them 6 years ago (that may have changed).

 

InvesterJones

They don't offer individual gilts, but you can buy gilt funds or ETFs

LateStarter

InvesterJones said:

They don't offer individual gilts, but you can buy gilt funds or ETFs

Thanks...not asking for a recommendation, but do you know if they offer any that are based on UK government issued bonds?

InvesterJones

LateStarter said:

InvesterJones said:

They don't offer individual gilts, but you can buy gilt funds or ETFs

Thanks...not asking for a recommendation, but do you know if they offer any that are based on UK government issued bonds?

The gilt or UK govt bond funds/ETFs will either purchase UK govt bonds for the fund, or track an index based on the prices of such bonds (usually also achieved by buying the gilts). Searching for the term 'gilt' in fund titles gives 23 OEIC/UT results, and 10 ETF results at Fidelity.

LateStarter

InvesterJones said:

The gilt or UK govt bond funds/ETFs will either purchase UK govt bonds for the fund, or track an index based on the prices of such bonds (usually also achieved by buying the gilts). Searching for the term 'gilt' in fund titles gives 23 OEIC/UT results, and 10 ETF results at Fidelity.

Hmm, had a look at some of those. They don't seem to provide the certainty that actual gilts do - or am i missing something?

Kryten_the_Titan

Fidelity do not offer individual UK gilts.  An example of a managed OEIC fund of UK gilts would be:

https://www.fidelity.co.uk/factsheet-data/factsheet/GB00BD050C73-royal-london-short-duration-gilt-m-inc/portfolio

and an example of a non-managed ETF of UK gilts would be:

https://www.fidelity.co.uk/factsheet-data/factsheet/IE00B4WXJK79-ishares-iii-plc/portfolio

The managed OEIC fund has higher charges but outperforms the ETF, which is what I would expect with a well run bond fund.

If your duration requirement is less than 5 years it might be better to opt for a money market fund, or a combination of a money market and a UK gilt fund.

InvesterJones

LateStarter said:

InvesterJones said:

The gilt or UK govt bond funds/ETFs will either purchase UK govt bonds for the fund, or track an index based on the prices of such bonds (usually also achieved by buying the gilts). Searching for the term 'gilt' in fund titles gives 23 OEIC/UT results, and 10 ETF results at Fidelity.

Hmm, had a look at some of those. They don't seem to provide the certainty that actual gilts do - or am i missing something?

What certainty are you after? Gilt funds are very different to individual gilts, but either can play a role (to different extents) in de-risking from equities. For even more certainty you could consider money market funds, or cash savings.

LateStarter

I'm 59, and I plan to use the SIPP to bridge to state pension from 61, .so some part of the SIPP will remain invested for up to 7 years. The intention is to move 1 or 2 years worth into short term money market funds, and keep the last 2 years invested.  For the rest...after a bit of reading, I've run into the concept of the "bond ladder", and the certainty of gilts appeals to me. I'd much rather have lower predictable growth than risk a market crash in the next 5 years. 

tigerspill

LateStarter said:

InvesterJones said:

The gilt or UK govt bond funds/ETFs will either purchase UK govt bonds for the fund, or track an index based on the prices of such bonds (usually also achieved by buying the gilts). Searching for the term 'gilt' in fund titles gives 23 OEIC/UT results, and 10 ETF results at Fidelity.

Hmm, had a look at some of those. They don't seem to provide the certainty that actual gilts do - or am i missing something?

I believe the difference is that the fund will trade the gilts and therefore reduce certainty in returns.
When buying individual gilts, you get a form of certainty.  With Indexed Linked you get a known return in real terms; with normal gilts you get a known return in absolute terms.  I went for ILGs as I want a guaranteed known return relative to inflation - The ones I bought have between 0.75 and 1.3% real return which is what I was after.
A gilt fund was not something I personally was interested in.  
So it really depends on what you are after.

Albermarle

LateStarter said:

I'm 59, and I plan to use the SIPP to bridge to state pension from 61, .so some part of the SIPP will remain invested for up to 7 years. The intention is to move 1 or 2 years worth into short term money market funds, and keep the last 2 years invested.  For the rest...after a bit of reading, I've run into the concept of the "bond ladder", and the certainty of gilts appeals to me. I'd much rather have lower predictable growth than risk a market crash in the next 5 years. 

Are you saying that the SIPP will be empty after 7 years? If so do you have an other pension provision apart from the state one.
I only ask because if you are intending to draw from the SIPP for many years, it is better not to be cautious with how it is invested.