AJ Bell Investments Launches Three New Gilt MPS Portfolios

AJ Bell Investments has extended its Gilt Managed Portfolio Service (MPS) range, adding three new portfolios with maturity dates stretching to 2032. The move comes less than a year after the launch of the original Gilt MPS offering and follows strong demand from financial advisers and their clients.

The three new portfolios complement the existing Gilt MPS ladder, which previously included maturities beginning later this year. The most recent addition, Gilt MPS 4, launched in December last year, now accounts for roughly a quarter of all assets under management across the entire Gilt MPS range, reflecting significant appetite for longer-dated products.

Expanding the Gilt MPS ladder

The Gilt MPS strategy invests in short-dated UK government bonds (gilts) that trade below par. Most of the return comes from capital appreciation at maturity, which is tax-free for UK investors. Only the coupon interest is subject to income tax at the client's marginal rate. The portfolios are designed to be held to maturity to benefit from the 'pull to par' effect, which mitigates interest rate fluctuations.

As part of the expansion, AJ Bell is renaming all existing and new portfolios to clearly indicate their maturity date. For example, the portfolio previously known as Gilt MPS 4 will become 'Gilt MPS Final Maturity 2027'.

The investment management charge remains at a low 0.10% per annum, and advised clients can invest with a minimum of £10,000, making the product accessible across a broad wealth spectrum.

Tax efficiency compared to cash

AJ Bell highlights the tax advantage of gilts for higher- and additional-rate taxpayers. A £100,000 investment in a one-year gilt could deliver an extra £525 (53 basis points) versus a fixed-rate cash savings account paying 4.1%, after income tax on savings interest is deducted for a higher-rate taxpayer. The equivalent pre-tax return from cash would need to be 5.01% to match the gilt's return.

Ryan Hughes, managing director of AJ Bell Investments, said: "Since we launched our Gilt MPS range just under a year ago, we’ve seen a surge in demand from advisers looking for flexible, tax efficient investment solutions to protect client wealth. After seeing significant appetite for the first three portfolios, our fourth Gilt MPS portfolio released in December has already seen considerable inflows. We are therefore meeting that demand directly by launching three new Gilt MPS portfolios to give advisers even more flexibility."

He added that with the end of the tax year approaching and potential further Bank of England rate cuts, advisers are well positioned to help clients secure tax-efficient returns. The tax advantage for higher- and additional-rate taxpayers will become even more prominent when the tax on savings interest increases by two percentage points from April 2027.

The Gilt MPS range now offers six different maturity preferences, allowing advisers to choose an investment horizon that suits their clients' needs. As each gilt matures, advisers can withdraw proceeds, rebalance within the existing portfolio, or move into an adjacent maturity step along the ladder.