Government bonds are bonds or IOUs issued by a government which pay a fixed rate of interest (or coupons) during their lifetime and pay the principal amount (or par value) on a set maturity date. They are considered to be relatively risk free compared to corporate bonds, as governments are less likely to go bust or default on interest payments.
M&G have been actively investing in the UK and overseas government bond market for a number of decades. We are currently one of the largest investors in the market for UK gilts and inflation-linked bonds, holding £23.2bn and over £9.1bn respectively*. Our expertise in the inflation linked bond sphere extends beyond the UK; we are vastly experienced in managing overseas inflation linked bonds in the US, as well as in Europe.
Using a variety of industry benchmarks, we are able to construct and manage institutional fixed income government bond portfolios, either in a segregated or a pooled fund format. There are a number of options available to investors wishing to combine this asset class with others, such as investment grade corporate bonds, high yield bonds and private debt. Our strategies have been designed to offer as much flexibility to clients as possible and can be tailored to meet their respective investment needs.
*as at 31 March 2013