Gilts
Gilts are issued by the Government and are often regarded as 'tax-free'. They usually have a
set life and pay coupons (interest) every six months and are 100% guaranteed by the Government.
Gilts are traded on the secondary market and prices will fluctuate according to short term
interest rates and expectations for inflation and the supply/demand for gilts. Gilts are not
considered to be a good inflation hedge as the rate of interest is fixed. A low yield relative
to the coupon indicates that the market expects low inflation and low interest rates over its
remaining life. Index Linked Gilts are fixed to the Retail Price Index (RPI), not the
Consumer Price Index (CPI) and both capital and interest adjusts. For normal non-inflation
linked bonds, investors are taxed at their marginal rate.
Short Dated Gilts (<5 yrs)
| Short Dated Gilts (<5 yrs) |
Gross Redemption Yield |
As of |
Income Yield |
Clean Price |
Net Real Yield at Income Tax of 20% |
Net Real Yield at Income Tax of 40% |
|
TREAS 3.25 07 Dec 2011
|
1.11%
|
08/03/2010
|
3.13%
|
103.70p
|
0.89%
|
0.67%
|
|
TREAS 4.5 07 Mar 2013
|
1.97%
|
08/03/2010
|
4.19%
|
107.33p
|
1.58%
|
1.18%
|
|
TREAS 5.0 07 Mar 2012
|
1.30%
|
08/03/2010
|
4.66%
|
107.26p
|
1.04%
|
0.78%
|
|
TREAS 5.25 07 Jun 2012
|
1.50%
|
08/03/2010
|
4.85%
|
108.25p
|
1.20%
|
0.90%
|
Short Dated Index Linked Gilts (<5 yrs)
| Short Dated Index Linked Gilts (<5 yrs) |
Gross Redemption Yield |
As of |
Income Yield |
Clean Price |
Net Real Yield at Income Tax of 20% |
Net Real Yield at Income Tax of 40% |
|
TSY I/L 16 Aug 2013
|
2.33%
|
08/03/2010
|
2.29%
|
266.93p
|
-1.120
|
-1.591
|
|
TSY I/L 16 Jul 2016
|
3.38%
|
08/03/2010
|
2.23%
|
297.54p
|
-0.076
|
-0.542
|
|
TSY I/L 23 Aug 2011
|
0.88%
|
08/03/2010
|
2.38%
|
307.30p
|
-2.568
|
-3.046
|
Data supplied by Barclays Capital.
Bestinvest (Brokers) Ltd & Bestinvest (Consultants) Ltd are authorised and regulated by the Financial Services Authority