Gilts are low-risk bonds backed by the credit of the state.

A gilt is a vivid name for a bond with an extremely high credit rating and outstanding safety, and it originated in the United Kingdom. At the time, the certificates of government bonds issued by the British government had gilded edges, and investors regarded them as the most reliable investment, which is how gilts got their name. Later this term gradually became more general and is usually used to refer to government bonds issued by the central government and backed by the credit of the state.

The most prominent feature of gilts is their high safety: because the issuer's credit is reliable, the risk of default is extremely low, and the repayment of principal and interest is relatively secure. Next is stable returns: the interest rate is agreed upon at the time of issuance, and holders can receive interest on schedule. In addition, such bonds can usually be traded on the market and have relatively good liquidity, making it convenient for investors to arrange their funds flexibly.

In terms of maturity, gilts are divided into short-term, medium-term and long-term, and the longer the maturity, the higher the sensitivity to interest rate fluctuations generally is. In terms of interest payment methods, there are both coupon bonds that pay interest on schedule and discount bonds issued below face value and redeemed at face value at maturity, so investors can choose the appropriate type according to their fund arrangements.

In investment applications, gilts suit investors seeking steadiness and are often used as the foundation holding in asset allocation to resist risk. However, they are not without risk: when market interest rates rise, bond prices may fall, and when inflation is high, real returns can also be eroded. Therefore, before buying, you should reasonably choose the maturity and type based on your own plans for using the funds and your risk tolerance.