Iggo: Inflation-linked gilts attractive despite low real yields

Inflation-linked gilts are "very attractive" as a defensive allocation in portfolios, despite low real yields, says Chris Iggo at AXA Investment Managers.

The firm's CIO of fixed income says although the real yields on index-linked gilts are not attractive and are even negative in some cases, they serve as a protection mechanism that could outperform if inflation does surprise on the upside. "From that perspective, if you want to have some defensive allocation in a portfolio I still think they are very attractive." He adds: "I think the general level of nominal yields, which have been pushed down by quantitative easing and foreign buying, has also had an impact that has pushed down real yields." Six-month GBP index-linked gilts are y...