ILGs

Linton

https://forums.moneysavingexpert.com/discussion/comment/82171258#Comment_82171258

Surely the reason for using ILGs to finance your retirement is to minimise risk rather than maximising potential income. It seems a bit perverse to consider gambling on future inflation rates.

In any case pricing of all gilts is based on current and expected interest and inflation rates. So you would expect transferring between ILGs and fixed gilts to be only of marginal benefit. If everyone did it market prices would change to remove the benefit.

Unless of course your prediction of future inflation rates is better than the market’s.

af1963

When it gets close to maturity, I can see that you may look at the YTM on the gilts that you hold, and decide that there's a better deal available, maybe in fixed interest accounts. With a year to go, as in the worked example above, you might decide the risks of runaway inflation over that period are not worth "paying" the negative YTM to insure against, and you can do better by cashing the IL gilts now and putting the money elsewhere.

But generally, as you say, you'd expect the market to equalise between returns available from different investments so there wouldn't be much gain to be made, especially after trading costs.