Gilts a poor diversifier for cautious investors - Morningstar

The group's head of multi-asset portfolio management pointed out that, while the average yield on gilts had fallen significantly,  duration on UK government bonds had all but doubled since 1998, as the right-hand graph below illustrates. "The sensitivity of the market to a rate rise has therefore dramatically increased," Coop added. "For a lot of portfolios, that is an issue because people who are in conservative or cautious portfolios - those portfolios are stuffed full of gilts." Source: Morningstar Investment Management In his view, this growing duration risk has not receive...