At a time when quantitative easing flows dominate sovereign bond prices, the key reasons for holding them are now questionable, writes James Klempster, portfolio manager at Momentum.
The world has come a long way in 30 years. In 1983, the Cold War was still a major cause of geopolitical tension, Michael Jackson’s Thriller was number one and the world was naive to the dubious charms of the Chicken McNugget. In those days, inflation (RPI) in the UK was around 5% and the 10-year gilt yielded more than 10%, meaning gilt investors received a real yield of approximately 5%. How things change. Today the 10- year gilt yields around 2.5% and RPI is 3.1%. This means gilt investors are losing money in inflation-adjusted terms. Gilts are nearing the end of a 30-year bull m...
To continue reading this article...
Join Professional Adviser for free
Signup and gain exclusive members-only insights
- Unlimited access to real-time news, industry insights and market intelligence
- Stay ahead of the curve with spotlights on emerging trends and technologies
- Receive breaking news stories straight to your inbox in the daily newsletters
- Make smart business decisions with the latest developments in regulation, investing retirement and protection
- Members-only access to the editor’s weekly Friday commentary
- Be the first to hear about our events and awards programmes
