Index-linked gilts were the best performing asset class of 2014, according to data from Baring Asset Management, despite the low interest-rate environment in the UK, US and Europe.
Last year they returned 21.4 per cent for investors compared to hedge funds, the worst performing asset class, which returned -0.5 per cent.
The North American equities market performed strongly again, returning 19.6 per cent while European and UK equities were among the worst performing asset classes.
Marino Valensise, head of Barings’ Global Multi Asset Group and chairman of the strategic policy group, said: “Comparing and contrasting the US position with those in Europe and Japan, it is clear how diverging situations are in place: currency strength vs currency weakness, monetary tightening vs monetary easing.”
■ Index-linked gilts – 21.4 per cent
■ North American equities – 19.6 per cent
■ UK equities – 1.2 per cent
■ Hedge funds – -0.5 per cent
Bob Wilson, a director at Norwich-based GreenSky Wealth, said: “The performance of index-linked gilts has been quite surprising and there is a bit of a bubble being built up there.
“We are in an unusual scenario and people are looking for somewhere cautious to put their money with interest rates so low.”