SECTOR PROFILE
33.7 %
- fall in IA UK Index Linked Gilts sector so far this year
a better position to start providing diversification again ,” he adds . “ The difficult thing will be to work out when the peak in the interest rate cycle will be , but once things stabilise , we think gilts can once again start to provide investors with a defensive cushion .” As a result , Sánchez says that Square Mile has started to look at UK gilts again as a diversifier to counterbalance equities and other risk assets , although he is less convinced about the current investment case for index-linked gilts . “ The market considerations for UK index-linked gilts are very different ,” he says . “ The benchmark is different and they are much more susceptible to interest rate and duration risk , making them more volatile , so we remain cautious .”
A sting in the tail Given that UK index-linked gilts are supposed to follow inflation , their
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