Bonds hub
Please remember, investment value can go up or down and you could get back less than you invest. The value of international investments may be affected by currency fluctuations which might reduce their value in sterling.
How do bonds and gilts work?
Bonds and gilts are typically low risk fixed income investments which can take pride of place in any portfolio. Corporate bonds are issued by corporations and gilts are bonds issued specifically by the British government to borrow money.
There are different types of gilts but most will typically pay a fixed coupon biannually and mature on a set date in the future.
Find out more: What are bonds?
Why choose interactive investor to buy bonds and gilts?
- We offer one of the widest choice of investments in the market – more than 40,000 UK & global investment options, including bonds and gilts.
- Our flat fee plans start from £4.99 per month - Most other investment platforms charge a percentage fee that grows with your investments.
- The £4.99 monthly fee includes our Stocks & Shares ISA and Trading Account.
- Free Regular Investing - available on all of our plans.
Bonds and gilts available at ii
Investments should not be taken as personal recommendations to buy or sell a particular stock or fund, and are not intended to provide advice.
How to buy bonds
You can trade a number of bonds and gilts via your online ii account. For any that aren't available online, you can deal over the phone by calling us on 0345 607 6001.
Fixed Income – review Q4 2023
The Bloomberg Global Aggregate Index fell 0.25% in 2023 in sterling terms but rose 5.72% in dollar terms, with Q4 being an exceptionally good quarter. That’s because sentiment on monetary policy began to shift as markets started to anticipate rate cuts being on the horizon. Global corporates rose 2.35% in sterling terms, outperforming global treasuries. The story is the same in the UK, Europe, and the US. Investment grade bonds were outperformed by global high yield (HY), which rose 7.61% this year as these bonds tend to be less sensitive to interest rate movements than investment grade bonds.
In the UK, gilts returned 3.69% and outperformed inflation-linked gilts (0.93%) in 2023 due to the latter having a higher duration profile, which is unfavourable when interest rates rise. Gilts and inflation-linked bonds rose 8.11% and 9.41% respectively in Q4 as the Bank of England opted to hold rates at 5.25% from August, with expectations of future falls being priced in.
The UK gilt 2-year yield rose over the year from 3.57% to 3.97% with a peak of 5.50%, while the 10-year yield fell marginally from 3.67% to 3.54%, with a peak of 4.75%.
US Treasury 2-year yield fell from 4.41% to 4.25% with a peak of 5.21%, while the 10-year yield rose from 3.79% to 3.86%, with a peak of 4.99%.
| Q4 (%) | 1 year | 3 years | 5 years | |
| Global High Yield | 3.94 | 7.61 | 2.53 | 3.89 |
| Sterling Corporate | 7.37 | 8.62 | -4.67 | 0.47 |
| EURO Corporate | 5.51 | 5.67 | -3.83 | -0.64 |
| Global Corporate | 3.48 | 2.35 | -0.78 | 2.63 |
| Global Aggregate | 3.5 | -0.25 | -3.28 | -0.33 |
| Global Government | 3.5 | -1.7 | -4.87 | -1.49 |
| UK Gilts | 8.11 | 3.69 | -9.18 | -2.82 |
| Global Inflation Linked | 3.95 | -0.19 | -3.55 | 0.35 |
| UK Inflation Linked | 9.41 | 0.65 | -11.83 | -4.09 |
Source: Morningstar as of 31 December 2023. Total Returns in GBP. Global Aggregate: Bloomberg Global Aggregate, Global Government: Bloomberg Global Treasury, UK Gilts: FTSE Act UK Conventional Gilts All Stocks. Global Corporate: Bloomberg Global Corporate, Sterling Corporate: ICE BofA Sterling Non-Gilt, Euro Corporate: Markit iBoxx EUR, Global High Yield: Bloomberg Global High Yield, Global Inflation Linked: Bloomberg Global Inflation Linked, UK Inflation Linked: Bloomberg Global Inflation Linked UK.
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Learn more about investing in bonds with ii
What are bonds?
The basics of bonds. Find out about the types of bonds, bond yields, tax on bonds and bond prices.
What are gilts?
A beginners guide to gilts. Learn about the types of gilts, gilt yields and gilt tax rules.
Corporate bonds
Discover the types of corporate bonds, corporate bond tax rules, how to invest in corporate bonds and why.
Bonds Basics with Sam Benstead
Your questions answered...
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