Buy bonds and gilts

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 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.

Fixed Income – review Q4 2024

The Bloomberg Global Aggregate Index rose 0.07% as major central banks begun their rate-cutting programmes over 2024, with the European Central Bank beginning in June as an economic slowdown was more apparent, followed by the Bank of England in August and the Federal Reserve in September.

Despite rate cuts, rises in long-dated government bond yields were seen due to political instability, fiscal pressures, the threat of trade wars and fewer than expected rate cuts in 2025, due to inflation expectations as a result of fiscal policies. 

In the UK, markets reacted negatively to the new Labour government’s Autumn Budget as Chancellor Rachel Reeves announced £40 billion worth of tax increases with borrowing also expected to increase, which caused UK 10-year government yields to rise from 3.54% to 4.57% in 2024. There are also inflationary concerns off the back of the Autumn Budget, which has dampened the possibility of further rate cuts.  

In the US, there were concerns over potential inflationary policies with an incoming Trump administration and a Republican sweep of Congress as the US saw an unexpected uptick in inflation leading to an increase in US 10-year yields from 3.86% to 4.58% over the year. Despite the Fed having cut their target rate three times in 2024, they have signalled fewer rate cuts in the future due to inflationary concerns.  

Overall, riskier assets outperformed as high-yield bonds rose 11.14% outperforming investment-grade counterparts (3.0%), and global corporates outperformed global treasuries including in the UK, Europe and US. 

Source: Morningstar as of 31 December 2024. 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. Past performance is not a guide to future performance.