Gilts a poor diversifier for cautious investors - Morningstar

Duration doubled in 20 years

Victoria McKeever
clock • 1 min read

Low yields in combination with duration and inflation concerns have heightened the risk for cautious investors whose portfolios are "stuffed" with UK government bonds, according to Morningstar's Mike Coop.

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...

To continue reading this article...

Join Professional Adviser for free

  • 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

Join

 

Already a Professional Adviser member?

Login

More on Investment

Neil Woodford to charge up to £70 a month to access portfolio platform

Neil Woodford to charge up to £70 a month to access portfolio platform

W4.0 launches

Cristian Angeloni
clock 06 June 2025 • 2 min read
FIF25: House of Lords member calls for stronger international economic cooperation

FIF25: House of Lords member calls for stronger international economic cooperation

Economics often a driver of geopolitical instability

Sorin Dojan
clock 04 June 2025 • 2 min read
Woodford sets date for portfolio platform launch

Woodford sets date for portfolio platform launch

W4.0 will launch on Friday 6 June

Cristian Angeloni
clock 03 June 2025 • 1 min read