What are Index-linked Gilts?
First issued in 1981, rather than paying a fixed coupon and amount on redemption, Index-linked Gilts' semi-annual coupon payments and principal are indexed to the UK Retail Prices Index (RPI). It is worth noting that there is a time lag on the RPI used to calculate the coupon and redemption period, however these instruments do offer a shelter against inflation. Because of the inflation-linking aspect of these bonds, Index Linked Gilts may show a wider movement of price over time.