UK Index-Linked Gilts Investment Strategy

Strategy highlights

: Aims to use analysis of inflation and inflation expectations to generate attractive returns

Benefits from a broad perspective owing to our long-term thematic research

Managed by a focused, experienced fixed-income team

Our philosophy and process

: The strategy invests predominantly in sterling index-linked gilts. A constantly evolving and forward-looking approach seeks to anticipate change and identify opportunities.

ESG (environmental, social and governance) considerations are integrated throughout the research process to ensure that any material issues are captured.

Every time we consider a security or look at an industry or country, it’s in the context of what’s happening across the world. We believe the investment landscape is shaped over the long term by some key trends, and we use themes to help identify opportunities.

Investment Team

Our Global Dynamic Bond Income strategy is managed by a focused, experienced fixed-income team. In-house research analysts are at the core of our investment process, and our multidimensional research platform spans fundamental, thematic, ESG, quantitative, geopolitical, investigative and private-market research to promote better-informed investment decisions.

26: years’ average investment experience
19: years’ average time at Newton

Paul Brain

Investment leader, fixed income
Parmeshwar Chadha

Portfolio manager, fixed income
Howard Cunningham

Portfolio manager, fixed income
Jon Day

Portfolio manager, fixed income
Carl Shepherd

Portfolio manager, fixed income
Trevor Holder

Portfolio manager, fixed income

Strategy profile

Objective: The strategy seeks to marginally outperform the FTSE Actuaries UK Index-Linked Gilts Over 5 Years Index, over rolling 5-year periods, by achieving long-term income and capital growth from a portfolio comprised predominantly of sterling index-linked government bonds and other public fixed-income securities.
Performance benchmark: FTSE Actuaries UK Index-Linked Gilts Over 5 Years Index

Strategy inception: Composite inception: 1 January 1996
Strategy available through pooled UK vehicle: BNY Mellon Index Linked Gilt Fund

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Strategy factsheet

Performance and commentary for the last quarter.

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Your capital may be at risk. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested.

Newton will make investment decisions that are not based solely on ESG considerations. Those considerations are among many inputs into the fundamental analysis. Other attributes of an investment may outweigh ESG considerations when making investment decisions. The way that material ESG considerations are assessed may vary depending on the asset class and strategy involved. As of September 2022, the research team performs ESG analysis on equity securities prior to their addition to Newton’s Research Recommended List (RRL). ESG reviews are not performed for all fixed income securities. The portfolio managers may purchase equity securities that are not included on the RRL and which do not have ESG reviews. Not all securities held by Newton’s strategies have an ESG review completed prior to investment.

Key investment risks

: Objective/performance risk: There is no guarantee that the strategy will achieve its objectives.

Currency risk: This strategy invests in international markets which means it is exposed to changes in currency rates which could affect the value of the strategy.

Geographic concentration risk: The strategy primarily invests in a single market which may have a significant impact on the value of the strategy.

Derivatives risk: Derivatives are highly sensitive to changes in the value of the asset from which their value is derived. A small movement in the value of the underlying asset can cause a large movement in the value of the derivative. This can increase the sizes of losses and gains, causing the value of your investment to fluctuate. When using derivatives, the strategy can lose significantly more than the amount it has invested in derivatives.

Changes in interest rates & inflation risk: Investments in bonds/money market securities are affected by interest rates and inflation trends which may negatively affect the value of the strategy.

Credit risk: The issuer of a security held by the strategy may not pay income or repay capital to the strategy when due.

CoCos risk: Contingent Convertible Securities (CoCos) convert from debt to equity when the issuer’s capital drops below a pre-defined level. This may result in the security converting into equities at a discounted share price, the value of the security being written down, temporarily or permanently, and/or coupon payments ceasing or being deferred.

Counterparty risk: The insolvency of any institutions providing services such as custody of assets or acting as a counterparty to derivatives or other contractual arrangements, may expose the strategy to financial loss.

Insights

Video

Brainwaves Episode 5: Sticky inflation – how do central banks react?

Fixed-income head Paul Brain talks to Multimedia editor Matthew Goodburn about how stickier-than-expected inflation could influence central-bank monetary policy decisions over the coming weeks and months.

18 May 2023