{"id":147818,"date":"2025-09-19T17:53:08","date_gmt":"2025-09-19T17:53:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/147818\/"},"modified":"2025-09-19T17:53:08","modified_gmt":"2025-09-19T17:53:08","slug":"gilts-and-the-autumn-budget-what-investors-need-to-know-plus-3-fund-ideas","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/147818\/","title":{"rendered":"Gilts and the Autumn Budget \u2013 what investors need to know, plus 3 fund ideas"},"content":{"rendered":"

UK government bond (gilt<\/a>) yields are high heading into this year\u2019s Autumn Budget. And just like last year, markets are watching closely \u2013 not just for the Chancellor\u2019s announcements, but for what they could mean for borrowing, inflation<\/a>, and interest rates<\/a>.<\/p>\n

After a choppy year for the bond market, what\u2019s the case for gilts now? <\/p>\n

This article isn\u2019t personal advice. If you\u2019re not sure if an investment\u2019s right for you, ask for financial advice<\/a>. Yields<\/a> are variable and are not a reliable indicator of future income, and no income is ever guaranteed. Past performance also isn\u2019t a guide to future returns.<\/p>\n

Gilt yields still high<\/p>\n

Gilt yields have risen since Rachel Reeve\u2019s first Budget last October caused quite a stir in the market. At the time of writing the 10-year gilt yield sits at 4.65%, with 30-year yields at 5.47% – both near their highest levels in over 15 years.<\/p>\n

These yields are down to a few things \u2013 rising inflation, uncertainty around government borrowing, and expectations that interest rates could stay higher for longer than previously thought.<\/p>\n

At the same time, high yields mean gilts are generating an attractive income and, potentially, even offering growth potential if rates fall in future. That\u2019s because gilt prices typically move in the opposite direction to rates, so, when interest rates fall, yields should also fall, and gilt prices rise. <\/p>\n

What does the Autumn Budget 2025 mean for gilts?<\/p>\n

The last Budget caused a sharp swing in gilt yields. Initially, they dropped as markets priced in a cautious tone. But once the Chancellor unveiled changes to the fiscal rules and higher medium-term borrowing, investors reassessed the government\u2019s debt plans, and gilt yields jumped again.<\/p>\n

Approaching this year\u2019s Budget, the government is under pressure to borrow more, and we could see spending promises in areas like energy and infrastructure. This could mean more gilts being issued in the years ahead.<\/p>\n

Meanwhile, economic growth is stagnating and inflation, currently at 3.8%, is still above the Bank of England\u2019s<\/a> (BOE) 2% target. <\/p>\n

This makes life harder for both the government and BOE. Cutting interest rates or increasing spending could help stimulate the economy, but risk fuelling inflation. And holding back could keep inflation in check, but stifle growth.<\/p>\n

This uncertainty could create market volatility around the Budget, but that could also create opportunities for investors.<\/p>\n

Why gilts now?<\/p>\n

With 10-year yields at 4.65%, gilts could appeal to income seeking investors. This is currently higher than what\u2019s available from many UK stocks, with the FTSE All Share<\/a> yielding 3.35% as at the end of August 2025.<\/p>\n

Additionally, while rates are unlikely to drop quickly in the short term, eventually, a cut is more likely than an increase. In this instance gilt prices should rise, providing a boost to returns as well as income. <\/p>\n

This is because gilts are free from Capital Gains Tax, whether held inside a tax-free wrapper like a Stocks and Shares ISA<\/a> or a Self-Invested Personal Pension<\/a> (SIPP) or even outside one with a Fund and Share Account<\/a> where it\u2019s free to hold gilts. So, if you sell a gilt for more than you paid, you keep the gain tax-free.<\/p>\n

As with any investment, there are risks. If inflation stays stubborn or the BOE delays further rate cuts, gilt yields could rise again, which would push prices lower. And any higher-than-expected borrowing in the Autumn Budget could also put upward pressure on yields.<\/p>\n

Looking at it long term, future yields will likely be lower than where they are today. That means investing now offers the potential for capital gains as well as income.<\/p>\n

Remember though, all investments and any income from them can rise and fall in value, so you could get back less than you invest.<\/p>\n

Want to invest in gilts?<\/p>\n

If you\u2019re looking to buy individual gilts, explore the gilt section<\/a> of our website. There\u2019s lots of information to help you make the best choice for your circumstances.<\/p>\n

Investing isn\u2019t right for everyone. When choosing investments make sure they match your goals, attitude to risk and are held as part of a diversified portfolio. If you\u2019re not sure if an investment\u2019s right for you, ask for financial advice<\/a>.<\/p>\n

Want exposure to bonds? \u2013 3 fund ideas<\/p>\n

For investors looking to add bonds and gilts to their portfolio but not sure where to start, here are three expertly managed funds. But remember, investing in gilts through funds doesn\u2019t offer the same tax benefits outside of a tax wrapper. <\/p>\n

Investors should only invest if the fund\u2019s objectives are aligned with their own, and there\u2019s a specific need for the type of investment being made. Investors should understand the specific risks<\/a> of a fund before they invest, and make sure any new investment forms part of a diversified<\/a> portfolio.<\/p>\n

For more details on each fund and its risks, use the links to their factsheets and key investor information.<\/p>\n

Legal & General All Stocks Gilt Index Trust<\/p>\n

Legal & General All Stocks Gilt Index Trust<\/a> aims to track the broad movement in prices of all gilts currently in issue.<\/p>\n

It\u2019s a low cost and easy way to invest in lots of different gilts and a great option for portfolios looking specifically for exposure to gilts. However, funds that invest in only one type of investment can increase concentration risk. So, they should only form a small part of a well-diversified portfolio.<\/p>\n

As there are only a limited number of gilts available to invest in, the performance of each individual gilt can have a bigger impact on the fund performance, which increases risk.<\/p>\n

Please note charges can be taken from capital, which can increase the yield, but reduces the potential for capital growth. The fund may invest more than 35% in securities issued or guaranteed by a member state of the European Economic Area or other countries listed in the fund\u2019s Prospectus.<\/p>\n

Annual percentage growth<\/p>\n

31\/08\/2020 to 31\/08\/2021<\/p>\n

31\/08\/2021 to 31\/08\/2022<\/p>\n

31\/08\/2022 to 31\/08\/2023<\/p>\n

31\/08\/2023 to 31\/08\/2024<\/p>\n

31\/08\/2024 to 31\/08\/2025<\/p>\n

Legal & General All Stocks Gilt Index<\/p>\n

-0.76<\/p>\n

-20.01<\/p>\n

-9.34<\/p>\n

7.15<\/p>\n

-2.17<\/p>\n

IA UK Gilts<\/p>\n

-0.87<\/p>\n

-20.59<\/p>\n

-10.07<\/p>\n

6.94<\/p>\n

-2.08<\/p>\n

Past performance isn’t a guide to future returns.<\/p>\n

Source: Lipper IM, 31\/08\/2025.<\/p>\n

Invesco Tactical Bond<\/p>\n

Managers Stuart Edwards and Julien Eberhardt invest flexibly in all types of bonds, including government and corporate bonds.<\/p>\n

They aim to provide some income and growth over the long term, with a focus on keeping losses during periods of market stress to a minimum. This focus has meant the fund has typically had less ups and downs than the wider market.<\/p>\n

Their active management approach also means they\u2019re able to stay away from areas of bond markets they think could perform poorly, and means the fund is highly diversified.<\/p>\n

We think this is a great option to invest in a fund with experienced managers who can take advantage of the opportunities that come from market volatility.<\/p>\n

The fund invests in high yield bonds and derivatives<\/a>, both of which add risk.<\/p>\n

Annual percentage growth<\/p>\n

31\/08\/2020 to 31\/08\/2021<\/p>\n

31\/08\/2021 to 31\/08\/2022<\/p>\n

31\/08\/2022 to 31\/08\/2023<\/p>\n

31\/08\/2023 to 31\/08\/2024<\/p>\n

31\/08\/2024 to 31\/08\/2025<\/p>\n

Invesco Tactical Bond<\/p>\n

6.40<\/p>\n

-5.20<\/p>\n

0.89<\/p>\n

8.48<\/p>\n

3.39<\/p>\n

IA Sterling Strategic Bond<\/p>\n

5.60<\/p>\n

-11.33<\/p>\n

0.00<\/p>\n

10.69<\/p>\n

4.94<\/p>\n

Past performance isn’t a guide to future returns.<\/p>\n

Source: Lipper IM, 31\/08\/2025.<\/p>\n

Royal London Corporate Bond<\/p>\n

Shalin Shah and Matthew Franklin, the fund\u2019s managers, focus on corporate bonds \u2013 those issued by companies. This provides diversification alongside government bonds.<\/p>\n

Royal London Corporate Bond<\/a> mainly invests in investment grade bonds, with some investments in higher risk, high yield bonds.<\/p>\n

Their edge comes from deep analysis of individual bonds, looking for those that offer higher returns. But the individual bond analysis conducted by the managers means they\u2019re comfortable that any additional risk being taken is well rewarded.<\/p>\n

We think this is also a great option to diversify an investment portfolio focused on shares. However, the managers\u2019 investment approach potentially makes it higher risk than some peers.<\/p>\n

The fund invests in unrated bonds, which adds risk.<\/p>\n

Please note charges can be taken from capital, which can increase the yield, but reduces the potential for capital growth.<\/p>\n

Annual percentage growth<\/p>\n

31\/08\/2020 to 31\/08\/2021<\/p>\n

31\/08\/2021 to 31\/08\/2022<\/p>\n

31\/08\/2022 to 31\/08\/2023<\/p>\n

31\/08\/2023 to 31\/08\/2024<\/p>\n

31\/08\/2024 to 31\/08\/2025<\/p>\n

Royal London Corporate Bond<\/p>\n

7.26<\/p>\n

-14.49<\/p>\n

-0.38<\/p>\n

12.57<\/p>\n

5.03<\/p>\n

IA Sterling Corporate Bond<\/p>\n

3.94<\/p>\n

-15.81<\/p>\n

-1.18<\/p>\n

10.76<\/p>\n

3.72<\/p>\n

Past performance isn’t a guide to future returns.<\/p>\n

Source: Lipper IM, 31\/08\/2025.<\/p>\n","protected":false},"excerpt":{"rendered":"UK government bond (gilt) yields are high heading into this year\u2019s Autumn Budget. And just like last year,…\n","protected":false},"author":2,"featured_media":147819,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[84,4176,4174,4175,56,54,55],"class_list":["post-147818","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-finance","tag-personal-finance","tag-personalfinance","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/147818","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=147818"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/147818\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/147819"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=147818"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=147818"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=147818"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}