As the FT also notes in another article:
Hargreaves Lansdown, the UK’s largest investment platform, said its conventional gilt sales had risen more than six fold over the past 12 months, compared with a 72 per cent rise for index-linked gilts.
Third, people want to save with the government. It really is time for the government to let them do so, as much as they want.
#Anyone been stopped from buying gilts? No? Then people are able to “save with the goernment” then, aren’t they?
“I want people to save with the government. It really is time for the government to force them do so, as much as I want.
Fixed it for him.
Andrew C makes the point – he wants ISAs abolished and the money already in them reallocated to his pet schemes. Most people would call that theft.
THIS IS A TRUELY REMARKABLE EXCHANGE EVEN BY MURPHYS STANDARDS!!!!!!
Anton Newcombe says:
November 24 2023 at 9:28 am
The rise in gilt ownership is purely down to valuation as rising interest rates have forced prices down making now a much more attractive entry point. Short dated gilts currently yield 5% and if you buy low coupon gilts the bulk of the return will be as capital gain and this is especially attractive for private investors as capital gains on gilts are tax free.
When gilt yields were sub 1% they represented very poor value and were mainly owned by pension fund managers who were forced to own them for regulatory purposes. Buying gilts around that time, even as recent as 2020 would have been a poor investment.
So the rise in interest rates has led to gilt prices falling sharply hence making them more attractive to buy now. The ending of QE and emergence of QT has led to price falls across all maturities where long dated yields touched 5% and again they were attractive for private investors to buy.
So guilts are much more attractive now than they have been compared to equities. As interest rates fall and gilt prices rise this will become less so as gilts can only offer you a finite amount of return.
+3
Reply
Richard Murphy says:
November 24 2023 at 10:35 am
You so totally miss the point. It’s quite scary really.
0
Reply
Anton Newcombe says:
November 24 2023 at 11:52 am
“You so totally miss the point. It’s quite scary really.”
What point do i miss? Do you think people want to invest in gilts irrespective of value? Do you think those who bought a few years ago are happy sitting on 20-59% losses? But that loss is tempered by the fact they made losses on govt gilts? of course not… it’s about value.
+2
Richard Murphy says:
November 24 2023 at 1:01 pm
You still miss the point
If yoy really think people are as rational as you imply then youy do not understand why they save as they do
+1
Anton Newcombe says:
November 24 2023 at 1:57 pm
“If yoy really think people are as rational as you imply then youy do not understand why they save as they do”
Yes i agree many high street savers through inertia do not behave entirely rationally. But the increased buying of gilts through the platforms like HL and AJ Bell is rationally motivated by he value offered by gilts post the fall in prices after the rise in interest rates and the end of QE /start of QT. It will reverse when the value has been extracted.
+1
Richard Murphy says:
November 24 2023 at 5:17 pm
You still don’t get it
I suggest you go and play elsewhere where your ‘talents’ might be appreciated
0
Want to save with gov’t? NS&I is over there…
Recent Gilt auction was many times oversubscribed as investors thought rates had peaked and locking in 4.5% for 10 years seemed great. Turns out massive leverage was used and things went pear shaped when rates went up. At least that’s the story our traders have been told by their counterparts in banks.
Capital gains on Gilts are tax free, so the trade has merits in bulk. I know a few people who have bought actual Gilts rather than funds.
Long term gilt supply is only up though. Up and Up.
Who knew Anton Newcombe, lead singer of The Brian Jonestown Massacre and renowned smackhead/alcoholic/mentalist, would know so much about UK economics?
Still more than Spud!