Salient to Investors:

Julian Brown at JLT Employee Benefits said:

  • UK pension funds are seeking alternatives to index-linked gilts for inflation-protected cash flows as the securities are very expensive and giving negative real yields. Ten-year index-linked gilts have yielded less than zero since September 2011.
  • The funds are diversifying into assets such as infrastructure and property projects, which offer an inflation-protected alternative and less liquidity which for long-term investors might not matter that much.
  • Corporate index-linked bonds are also expensive if you take into account credit risks.

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