Indexed linked vehicles attract investors anticipating inflation volatility ahead

Standard Life Investments, one of the largest fixed income managers in the UK, celebrates the fifth anniversary of its £280m Global Index Linked Bond Fund with the news that it has attracted over 17% of the company's £184m Q1 2009 mutual fund net sales.

Investors in the fund over the five year period since launch have seen a 25.9% return on their investment.

The Global Index Linked Bond Fund is of particular interest to investors seeking to limit the impact of inflation on the value of their investments over the longer term, those wishing to meet future liabilities that are linked to inflation, or those looking for diversification. The fund benefits from Standard Life Investments Focus on Change investment process with investment professionals across the asset classes providing essential global insights and drawing on expertise from our government, inflation, currency and corporate bond experts.

Commenting on the popularity of the fund amongst retail investors, Jonathan Gibbs, the fund's manager since its launch in May 2004, said; "Investors are currently fearful that the recently announced quantitative easing measures in the US and UK will have an unknown effect on inflation in the long term. Investors are realising that by investing in an inflation-linked product such as the Global Index Linked Bond Fund, they are able to mitigate the risk that these anticipated inflationary pressures pose. The combination of a complex mix of inflationary and deflationary forces at play in the global economy and the great uncertainty which is likely to prevail, means that diversified risk is more important than ever.

"Whilst hedging international exposure back to sterling, the fund's mandate lets us cast a wide net and accordingly, we benefit from a wide range of investment opportunities. We believe the most attractive real yields at present are in the US and Europe. Although market inflation expectations have risen in these markets, they represent cheap protection in historic terms.

"The fund is a powerful diversifier both within a bond portfolio and the wider range of asset classes. In times of volatility and uncertainty, which looks to be where we are for a considerable period, a diversified portfolio is even more important. At the same time, there is a value opportunity in that inflation expectations are priced at low levels, when governments are stimulating economies rapidly and in untried ways. The effects of these policies are not known."