News & Insight • In the News
14 April 2025 | Simon King
FT Adviser
David Thorpe spoke to Simon King asking if gilts can continue to perform strongly after such a strong bounce in the price, and the role they can they play in a wider portfolio.
Simon said: “We had very limited exposure to gilts and other government debt until about two years ago. With the rise in interest rates we believe gilts offer a more attractive risk/reward profile and are once again a viable diversifier and unlikely to be as highly correlated to equities over the next few years. As with any potential investment we compare them with other options, ie non-UK government debt, although this also necessitates a currency decision, and also whether we are going to make money on an absolute return basis.
We remain very cautious on the outlook for meaningful interest and inflation reduction in the UK, which does restrain our overall exposure and means we stay at the short-dated end of the curve and are cautious on index-linkers as well. We are cognisant of the threat of very high levels of government debt leading to a major event but apply a low level of probability.”