Fund of the week: Capitalising on gilt yield bargains

published 5 September 2008

Current yields on UK Government bonds gilts of 4.37% may not sound too impressive compared with the latest British consumer price index inflation figure of 4.4%. But that hasn't stopped gilt funds being the best fixed-interest performers over the past year, says the latest research from Standard & Poor's. Standard & Poor's fund services lead analyst Kate Hollis says most bond managers agree that the UK economy is now likely to slip into recession. In particular, she says that "Pimco believes Western central banks have hiked rates too aggressively, making recession inevitable".

That could mean present gilt yields will look like something of a bargain, which should help Amey's fund to maintain the top-decile ranking it has achieved over the last one and three years, according to Trustnet. Although, as he warned in April, for the rest of us, "sadly, the next 18 months will not be much fun".

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