Government bonds in the U.K., India and several other Commonwealth countries are known as gilts. Gilts are the equivalent of U.S. Treasury securities in their respective countries. The term gilt is often used informally to describe any bond that has a very low risk of default and a correspondingly low rate of return. They are called gilts because the original certificates issued by the British government had gilded edges. Gilts are government bonds, so they are particularly sensitive to interest rate changes. They also provide diversification benefits because of their low or negative correlation with stock markets. Gilts often respond strongly to political events, such as Brexit. Gilts may be conventional gilts issued in nominal terms or index-linked gilts, which are indexed to inflation. Governments issue conventional gilts in the national currency, and they do not make adjustments for inflation. Index-linked gilts make payments for inflation, so they are quite similar to U.S. Treasury Inflation-Protected Securities.Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

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