Bonds & Gilts

What are Bonds and Gilts?

A bond is a loan. If a borrower wants to borrow money one of the ways to do it is to issue bonds. With a bond an investor lends money in return for a series of interest payments and, usually, the promise to have the loan repaid on a fixed date. You can invest in all UK government bonds (gilts), bonds issued by European Investment Banks (EIB) and Blue Chip Corporate bonds issued by individual companies.

Learn more about the types of Bond available.

How do they work?

The main feature that distinguishes a bond from any other loan is that a bond is tradeable. Investors can buy and sell bonds without the need to refer to the original borrower. Over the entire life of the bond the holder receives interest, which is known as the coupon. The borrower also makes a promise to repay the loan (the principal) on the maturity date.

Learn more about the Returns and Prices of Bonds.

How risky are they?

Bonds are often considered in times of economic and stock market uncertainty. Bonds (gilts and other fixed interest securities) provide a generally secure income and capital return. They are marginally less volatile than equities and provide a more secure income return than cash. Bonds tend to complement well-diversified portfolios as another asset class next to equities.

Learn more about the types of bonds available and see the relative risk of each type of bond.

Learn more about Price Volatility.

Which account should I choose to invest in Bonds?

You can invest in fixed interest bonds and gilts through our Trading Account, and Trading ISA Accounts.