What Is Gilt-Edged Market?

What Is Gilt-Edged Market?
Financial Systems on 17th July ' 09 from www.slideshare.net

What is Gilt-Edged Market?

Gilt-edged market is a term used to describe the market for UK government bonds, also known as gilts.

Gilts are government securities that are issued by the UK government and are backed by the full faith and credit of the British government. Gilts are generally seen as a very safe investment because of the government’s strong credit rating.

The Benefits of Investing in Gilts

Investing in gilts has a number of advantages. Firstly, they are generally very safe investments as they are backed by the British government. Secondly, they offer a steady income stream, with regular payments of interest.

Furthermore, gilts are exempt from capital gains tax and are a relatively liquid investment, meaning they can be easily bought and sold in the secondary market.

Risks of Investing in Gilts

Despite the many benefits of investing in gilts, there are some risks associated with them. Firstly, the returns from gilts are usually lower than other investments such as stocks and shares, meaning investors may not make as much money as they would from other investments.

Secondly, gilts are exposed to the risk of inflation. As the value of money decreases over time, the value of gilts may also decrease if inflation rises. Finally, gilts are exposed to the risk of default, meaning the government may not be able to repay the principal or the interest payments.


Gilt-edged markets are a safe and reliable form of investment, offering investors a steady income stream, as well as tax advantages. However, they are subject to the risk of inflation and default, meaning investors should be aware of these risks before investing.

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