Gilts look attractive, but trusts have more income growth potential

Yields on gilts have reached levels not seen for 16 years, but with real yields still negative, investors should look to trusts instead.

UK, London, blurred motion of incidental business people walking to work with view of the financial district behind gilts
(Image credit: Getty Images)

The yields on gilts have jumped to highs not seen since before the financial crisis only adding more fire to the chorus of stockbrokers, wealth managers and financial advisers urging their clients to buy short-dated gilts.

They point out that if you buy a low-coupon gilt, such as Treasury 0.125% redeeming at the end of January 2026, and hold it to redemption, you are guaranteed a return of over 10%, equivalent to an annualised return of around 4.5%.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Explore More
Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.