This index's full title is actually the FTSE Actuaries Government Securities UK Gilts All Stock Index, and it gives exposure to a diversified basket of UK government bonds, across all maturities – and all in the conventional space. That is, there are no index-linked holdings within this exclusively sterling denominated fund. That makes this index a brilliant tool for buying into a diversified basket of what are called conventional government securities, otherwise known as gilts.
The index isn't well known and there's currently only one ETF that tracks it – see Gilts table below – but this is probably one of those potential core holdings for any investor looking for an easy way to diversify away from equities towards bonds. Remember that if you want bonds exposure, you're safest bet is probably gilts, and if you want the best basket of sterling gilts, this index gives you that in spades. What's even better is that the lonely iShares ETF that covers this index is incredibly cheap – the total expense ratio is just 0.2 per cent. One note of caution, though – you probably shouldn't buy into this index if you think inflation is about to shoot up, if only because conventional gilts tend to do badly in these circumstances. Investors worried about inflation should consider using funds that track index-linked gilts in the UK, which are mostly provided by Barclays Capital.
Gilts
| Details | |
|---|---|
| Fund | iShares FTSE UK All Stocks Gilt |
| Ticker/EPIC | IGLT |
| Issuer | iShares Barclays |
| TER | 0.20% |
