What is a 'Gilt Fund'

Gilt funds are a type of British investment fund that invests in gilt securities. Gilts originated in Britain where gilt funds are primarily utilized.


Gilt funds are often known as one of Britain’s most conservative fixed income investments. The funds typically focus primarily on securities issued by the U.K. government called gilts. Gilt funds may also be found in India, which also issues gilt securities due to its historic designation as a British colony.

While gilt investments are primarily known to be government issued debt securities, they may also be offered by companies. In the U.K., high quality, low risk blue chip capital issuance of stocks or bonds may also be known as gilts or gilt-edged securities.

Gilt funds are primarily constructed with a conservative objective that includes investments with low risk. Similar to U.S. money market funds, they are a top investment for new investors seeking to earn returns slightly higher than traditional savings accounts. They most often invest in several different types of short-term, medium and long-term government securities. Since gilts or gilt-edged securities are also issued by corporations, gilt funds may also be constructed with corporate debt or equity gilt securities.

U.K. Government Gilts

U.K. gilt securities from the government primarily take three forms: conventional gilts, index-linked gilts and strips.

Conventional gilts – A conventional gilt issued by the U.K. government pays semi-annual coupon payments on the debt. U.K. gilts are issued with durations of five, 10 and 30 years. Some U.K. gilts may also be issued with a 55 year maturity or an undefined maturity.

Index-linked gilts – An index-linked gilt is similar to a Treasury inflation-protected security. These gilts have rates and principal payments linked to inflation. Investors receive varying coupon payments every six months based on the inflation rate.

Strips – Strips are gilt securities based on either the coupon component of a debt security or the principal payment. They strip an issued debt security into two parts for an investor.

Gilt Fund Investments

Gilt funds are offered by numerous investment managers across the investable market. Below are a few examples.

Henderson U.K. Gilt Fund

The Henderson U.K. Gilt Fund invests primarily in U.K. government gilt securities. It is managed by Janus Henderson. One year performance in the Fund’s investor share class was 2.10% as of December 1, 2017.

iShares Core U.K. Gilts UCITS ETF (IGLT)

The iShares Core U.K. Gilts UCITS ETF invests in U.K. government securities. As of December 1, 2017, 99.92% of the portfolio was in U.K. Treasury investments. One year return for the Fund as of October 31, 2017 was 0.51%. 

  1. Gilt-Edged Switching

    Gilt-edged switching is the purchase or sale of high-quality ...
  2. Gilt-Edged Securities

    Gilt-edged securities are high-grade investment bonds offered ...
  3. Gilt-Edged Bond

    A bond issued by the U.K. government at a fixed interest rate ...
  4. Undated Issue

    An undated issue is a government bond that has no maturity date, ...
  5. Index-Linked Bond

    An index-linked bond is a bond in which payment of income on ...
  6. Guilt-Edged Investment

    A guilt-edged investment is legal but perhaps not ethical. Such ...
Related Articles
  1. Investing

    Bond Holders Give Vote of Confidence in U.K.

    The U.K. DMO issued a 50-year bond at a record low rate. The bond received an overwhelming amount of orders.
  2. Insights

    Bank of England Cuts Interest Rates, Increases QE Program

    The Bank of England cut the base rate by 25bp to a record low and increased its QE program.
  3. Investing

    Inflation Protected Securities: How They Work

    Learn how the U.S. Treasury inflation-protected securities (TIPS) work, which considerations investors should keep in mind and for whom TIPS are most suitable.
  4. Investing

    Government Bond ETFs to Date 2016 Performance Review (ZROZ, EDV)

    Find out how government bond exchange-traded funds (ETFs) are performing YTD in 2016, and which are the best and worst performers.
  5. Investing

    The Top 5 International Bond Funds for 2016

    Understand the opportunities available within the international bond market, and learn about the top-rated global bond funds for 2016.
  6. Investing

    What's a Debt Security?

    A debt security is a financial instrument issued by a company (usually a publicly traded corporation) and sold to an investor.
  7. Investing

    What is UCITS?

    Essentially, UCITS are investment funds regulated by the European Union.
  8. Investing

    Explaining Government Bonds

    A government bond is a debt security a government issues.
  9. Investing

    VTIBX, DFGBX, PIGLX, TPINX, ANAGX: Top 5 Global Bond Funds

    Learn about the top global bond funds for 2016. See how funds with longer maturities and duration have greater exposure to interest rate risk.
  1. What is the difference between a gilt edged bond and a regular bond?

    A gilt edged bond is a high-grade bond issue. The term "gilt" is of British origin and originally referred to debt securities ... Read Answer >>
  2. Do mutual funds pay interest?

    Find out how and why some mutual funds pay interest, and which types of funds make regular dividend distributions to shareholders ... Read Answer >>
  3. Common examples of marketable securities

    Learn about marketable securities and the most common types of debt and equity securities, including common stock, bonds ... Read Answer >>
Hot Definitions
  1. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  2. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  3. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  4. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  5. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
  6. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
Trading Center