
Gilt Fund
Gilt funds are a type of British investment fund that invests in gilt securities. Since gilts or gilt-edged securities are also issued by corporations, gilt funds may also be constructed with corporate debt or equity gilt securities. U.K. gilt securities from the government primarily take three forms: conventional gilts, index-linked gilts, and strips. The Henderson U.K. Gilt Fund invests primarily in U.K. government gilt securities. Similar to U.S. Treasury funds, gilt funds are primarily utilized in the U.K. and nations that were once British territories in the commonwealth.

What Is a Gilt Fund?
Gilt funds are a type of British investment fund that invests in gilt securities. Gilts are the equivalent of U.S. Treasury securities in their respective countries, and originated in Great Britain where gilt funds are primarily utilized today.



Understanding Gilt Funds
Gilt funds are often known as one of Britain’s most conservative fixed income investments. The funds typically focus primarily on securities issued by the U.K. government called gilts. Gilt funds may also be found in India, which also issues gilt securities due to its historic designation as a British colony.
While gilt investments are primarily known to be government issued debt securities, they may also be offered by companies. In the U.K., high quality, low risk blue chip capital issuance of stocks or bonds may also be known as gilts or gilt-edged securities.
Gilt funds are primarily constructed with a conservative objective that includes investments with low risk. Similar to U.S. money market funds, they are a top investment for new investors seeking to earn returns slightly higher than traditional savings accounts. They most often invest in several different types of short-term, medium and long-term government securities. Since gilts or gilt-edged securities are also issued by corporations, gilt funds may also be constructed with corporate debt or equity gilt securities.
U.K. Government Gilts
U.K. gilt securities from the government primarily take three forms: conventional gilts, index-linked gilts, and strips.
Conventional gilts – A conventional gilt issued by the U.K. government pays semi-annual coupon payments on the debt. U.K. gilts are issued with durations of five, 10, 30, 50 or 55-year maturity.
Index-linked gilts – An index-linked gilt is similar to a Treasury inflation-protected security. These gilts have rates and principal payments linked to inflation. Investors receive varying coupon payments every six months based on the inflation rate.
Strips – Strips are gilt securities based on either the coupon component of a debt security or the principal payment. They strip an issued debt security into two parts for an investor.
Gilt Fund Investments
Gilt funds are offered by numerous investment managers across the investable market. Below are a few examples.
Henderson U.K. Gilt Fund
The Henderson U.K. Gilt Fund invests primarily in U.K. government gilt securities. It is managed by Janus Henderson. One year performance in the Fund was 8.98% for 2020.
iShares Core U.K. Gilts UCITS ETF (IGLT)
The iShares Core U.K. Gilts UCITS ETF invests in U.K. government securities. As of February 2021, 99.89% of the portfolio was in U.K. Treasury investments. One year return for the Fund as from December 2019 to December 2020 was 8.20.%.
Related terms:
Bond Fund
A bond fund invests primarily in bonds (government, corporate, municipal, convertible) and other debt instruments to generate monthly income. read more
Debt Financing
Debt financing occurs when a firm raises money for working capital or capital expenditures by selling debt instruments to individuals and institutional investors. read more
Fixed Income & Examples
Fixed income refers to assets and securities that bear fixed cash flows for investors, such as fixed rate interest or dividends. read more
Gilt-Edged Securities
Gilt-edged securities are high-grade investment bonds offered by governments and blue-chip companies as a means of borrowing money. read more
Gilts
Gilts are bonds that are issued by the British government and generally considered low-risk equivalent to U.S. Treasury securities. read more
Government Broker
A government broker is a British stockbroker who works for the U.K. government and purchases and sells government securities on the London Stock Exchange. read more
Government Security
Government securities are bonds issued by a government. Government securities can also pay interest. U.S. Treasury bonds are an example. read more
Inflation-Indexed Security
An inflation-indexed security is a security that guarantees a return higher than the rate of inflation if it is held to maturity. Inflation-indexed securities link their capital appreciation, or coupon payments, to inflation rates. read more
Money Market
The money market refers to trading in very short-term debt investments. These investments are characterized by a high degree of safety and relatively low rates of return. read more
U.S. Treasury
Created in 1789, the U.S. Treasury is the government (Cabinet) department responsible for issuing all Treasury bonds, notes, and bills. Discover more here. read more