Gilt yields could remain at record lows for 'at least a year'

Strategic bond fund managers Richard Hodges from LGIM and Fidelity's Ian Spreadbury both expect UK government bond yields to remain at their abnormally low levels for the foreseeable future.

Hodges (pictured), who heads up the £1.6bn L&G Dynamic Bond trust, thinks gilt yields will remain at historic lows, even if the UK's coveted triple-A credit rating is downgraded in the first quarter of next year. Last month UK government bonds touched a record low of 1.407%, with the asset class seen by many investors as the ‘ultimate safe haven trade' to shield assets against the unresolved European sovereign debt crisis. The 10-year benchmark gilt yield ended trading yesterday at 1.5% and Hodges expects gilt yields to remain at these subdued low levels for at least another year. ...