A glance at our database reveals a slight uptick in demand for government bond funds in 2024, with declining inflation and economic growth running at 0.6 per cent a quarter perhaps making people feel slightly less bad about the home market.

Our data shows the average balanced portfolio has an allocation to government bond funds in general of 8.23 per cent, compared with 7 per cent a year ago and 8 per cent at the start of 2024.

And a look at which government bond funds are attracting the capital shows Vanguard’s UK Government Bond Index fund is most popular, appearing in 11 of the portfolios we monitor, with three new buyers arriving since the start of 2024 and no new sellers. 

Given developed market government bonds don’t carry any material credit risk, it makes sense that these are accessed through passive instruments, as there are fewer ways for an active manager to add value. 

In total, 37 allocators have some sort of exposure to a gilt fund, with the next most owned being L&G’s All Stocks Gilt Index trust, which appears in five portfolios and was acquired by one new allocator at the end of 2023.

Gilts have been popular with investors over the year year, the 10 year presently trades above par and yields 4 per cent. 

But there has also been a growing interest in government bond funds from other developed economies: in the past two years our database has picked up buyers of Vanguard Euro Government Bond Index and Vanguard Japan Government Bond Index which are now owned by three and one allocators respectively.