gilts

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 UK has sold £700m of long-dated index-linked gilts for a negative real yield of 0.116%, the lowest level ever recorded.

Old Mutual Asset Managers' bond fund manager Stewart Cowley has warned investors in gilt funds face major headwinds in 2012, after falls in yields to record lows left them with little protection from coupons if prices start to come down.

International investors are buying record amounts of UK government bonds as the Bank of England's £75bn QE programme spurs demand, with the yield on the 10-year gilt hitting a new record low.

2011 has been a year when some of the most popular emerging market managers paid the price for the breakneck growth of recent years, with investors fleeing to safe havens as equities tanked amid the eurozone debt crisis.

Gilt yields hit a new record low by mid-afternoon as investors continued to buy up UK debt amid concerns the European Union has not done enough to avert a financial meltdown.

The Bank of England has overestimated the impact of quantitative easing on gilt yields, the Bank for International Settlements (BIS) has said.

After a momentous year for government debt, during which it far outstripped the majority of asset classes, managers have moved to take profits from positions in several major debt markets.

The government has said it will not issue CPI-linked gilts in 2012-13, saying the move would not be cost effective and would involve "a number of risks".

The Office for Budget Responsibility has revised public sector net borrowing forecasts even as Chancellor George Osborne proclaims the effect of falling gilt yields.