Fixed-Rate vs Index-Linked Gilts
By Financial World News editorial · Educational explainer · How we source yields
Conventional gilts pay a known sterling coupon; linkers pay a real coupon plus inflation uplift. Choose by inflation view and liability type.
Fixed-Rate vs Index-Linked Gilts — the mechanics
If your costs rise with UK inflation, linkers are a closer hedge. If you need a known cash amount in 2034, a conventional gilt to that date is simpler. Mixing both is common.
Fixed-rate: known sterling coupons, unknown real value. Linker: coupons and principal scale with the index, unknown real yield path. Pick the one that matches the bill you must pay.
In a disinflation surprise, conventionals often outperform linkers. In a 2021-style inflation surprise, linkers outperform on a hold-to-maturity real basis — after lag.
Tax and ISA wrapping can flip the comparison for UK residents. Run both in the same wrapper before deciding.
Official sources (UK Gilts)
Primary statistics and prospectuses for UK Gilts are published by the issuer, not by this newsroom. The labelled links at the end of this page go to those official sites (DMO, TreasuryDirect, Finanzagentur, MEF, AFT, SNB or ECB as relevant).
Our live board is a teaching overlay: dated prints, named sources, estimated ISIN lines. It is not a replacement for the issuer’s calendar.
Key takeaways
- Fixed-rate: known sterling coupons, unknown real value.
- Prices and yields change. When this site quotes them, it dates them on the live board.
- Credit of a G7 government in its own currency is not the same as a stable screen price, and not the same as a bank deposit.
FAQ
- Can I convert a conventional gilt into a linker?
- Not with the DMO. You would sell one and buy the other, paying spreads and tax consequences.