However, it’s less apparent whether duration has contributed to the returns of other members of the top 10. The other funds in the list break down how much they have allocated to different maturity bands rather than disclosing an average.
Popularity contest
Unsurprisingly, gilt fund launches remain few and far between in this day and age. But Franklin Templeton made a belated entry into the sector in 2017 with the launch of its own product. The fund house argued that volatility “presents the opportunity for active managers in an asset class that has been passively managed in many cases”.
That said, many professional investors appear to have given up on active gilt funds. Data from our sister publication Asset Allocator, a newsletter for discretionary fund managers, shows that 70 per cent of DFMs’ gilt fund picks are passive products.
The only active fund to have material backing from discretionaries is Mike Riddell’s £1.8bn Allianz Gilt Yield offering, which has made it into the lower reaches of Table 1.
Active may still have its merits: the fund in third place, Santander Sterling Government Bond, is not far behind the top two over three and five years, and even comes out ahead over one year. But despite the risks facing the asset class, few now appear convinced by the merits of such strategies.
