Are 100-year gilts good value?

Leading bond fund manager Jim Leaviss has questioned why investors - other than pension funds - should be interested in 100-year gilts, amid reports the Chancellor is gearing up to unveil them next week.

Leaviss, running nearly £1bn in the top performing M&G Gilt & Fixed Interest fund, said gilts with such a long lifespan may well appeal to pension funds, helping them to match long-term liabilities. "We have a history of long-issuance and we have a pension fund industry that has structural demand for extremely long-dated assets," he said. "Therefore it will sell, and it is good business for the government." However, with an expected yield of 3.5% - in line with the long end of the gilt market - he warned investors are running a big risk on inflation, and risked suffering the same f...