Asset management firm Quilter has introduced index-linked Gilts as a dedicated asset class within the Cirilium fund of funds range, Portfolio Adviser can reveal.
The allocation to this asset class will be around 5% for the conservative portfolios and will be scaled in line with the reduced bond exposure in higher risk portfolios.
Ian Jensen-Humphreys, portfolio manager of Quilter’s Cirilium portfolios, said: “This feels like a very pertinent time to be adding index-linked gilts to the portfolios.
“Bonds usually do well in a growth shock, but their diversification benefits break down when inflation is rising, reducing the value of the future income received consequently.”
Events this year have demonstrated the importance of both types of gilts, as geopolitical conflict started as a hit to growth, before turning into an inflation risk as it continued, he added.
The team have added to this asset class primarily through exposure to the Vanguard inflation-linked Gilt Index fund.
“Investors in the UK care deeply about inflation and its ruinous properties, so we always want to look for opportunities to enhance their asset allocation and ensure they have the right diversification to not only grow their capital, but to protect it too,” Jensen- Humphreys added.
Elsewhere within the Cirilium range, the team has increased exposure to Japanese equities, while slashing exposure to European equities as part of its latest quarterly rebalance.
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