Retail price index changes could hit 'complacent' index-linked gilt investors

Overhaul impact on 'linkers' to be assessed

Prices of long-dated index-linked gilts could see another steep fall as investor complacency sets in, but an allocation to the asset class could still benefit multi-asset portfolio managers, according to industry experts.

The UK index-linked gilts sector was the best-performing Investment Association (IA) sector in the 12 months to 31 August, with the average fund returning 19.99% as interest rate expectations began to decline. However, gains reversed when changes to the retail price index (RPI) methodology were announced on 4 September. UK inflation slips to 32-month low In the month of September, so-called linkers were the worst-performing IA sector, losing an average of 1.75%. The overhaul, expected to happen between 2025 and 2030, will bring the measure in line with the consumer price index, ...