GARS sells 30-year gilt in UK inflation trade

Standard Life Investments' £9bn Global Absolute Return Strategies (GARS) fund has cut its exposure to UK gilts, taking profits as yields hit record lows.

The GARS fund initiated a trade on UK inflation last year, taking a long position on five-year inflation through swaps. The fund, which is headed up by the fund's multi-asset team led by Euan Munro, believe the UK inflation swaps are mispriced and the Bank of England (BoE) is unlikely to cool inflation to reach its 2% target in five years' time. Tam McVie, absolute return product specialist, said to carry out the trade the team bought a 30-year gilt alongside the swaps, in essence creating an index-linked bond to take advantage of the anomaly in the five-year inflation swap market. ...