Quilter has introduced index-linked gilts as a dedicated asset class within its Cirilium portfolios following a review of the range’s strategic asset allocation.
The wealth manager has added the Vanguard Inflation-Linked Gilt Index fund to its lower-risk portfolios in a bid to improve diversification and provide greater protection against UK inflation.
The allocation will account for approximately 5% of the Cirilium Conservative portfolios and will gradually reduce across higher-risk profiles as their overall fixed-income exposure falls.
Quilter reviews the strategic asset allocations across its investment ranges quarterly, with recommended changes typically implemented once a year.
As part of the latest update, the Cirilium portfolios have also increased their exposure to Japanese equities while reducing allocations to European equities.
Ian Jensen-Humphreys, portfolio manager of Quilter’s Cirilium portfolios, said: “Bonds usually do well in a growth shock, but their diversification benefits break down when inflation is rising, reducing the value of the future income received consequently.
“Events earlier this year showed why you need both types of gilts within a portfolio, given the geopolitical situation risked manufacturing a hit to growth before transforming into an inflation risk the longer it went on.”
Jensen-Humphreys added that the situation in the Middle East appeared calmer, although the ceasefire remained fragile, making it an appropriate time to increase exposure to assets designed to mitigate inflation.
