Is Scotland vote driving a rally in index-linkers?

The upcoming Scottish referendum may be providing an unexpected boost to the index-linked gilt market as a lack of supply and investor caution fuel a strong rally in the space.

The rally, which meant the IMA UK Index Linked Gilt sector topped the rankings last month with a return of 4.8%, has come despite the latest available figures showing RPI inflation remains subdued at just 2.5% in July.  The principle driver of the strong returns remains a renewed desire for duration, which also prompted a 3% rally in gilts last month, and has meant 12% year-to-date returns for index-linked gilt funds.  But factors relating to the 18 September referendum have also had a role to play. Guy Foster, head of research at Brewin Dolphin, noted a 'yes' vote would mean many pen...