As we are concerned with long-term estimates, we have concentrated upon stocks at the longer end of the spectrum at around 15 years. Yes, we now have an ILG of nearly 50 years but it's still not been with us for that long and we have few conventional comparators. While not always the case over individual years, ILGs have normally performed worse than conventionals. Given that one should pay a premium for protection, that is probably reasonable but one wonders if the premium is too high.
Below, we present some statistical comparisons by duration, where the underlying assessment periods all start at the end of December. In particular, we are showing “long conventionals by duration”, “long ILGs by duration” and relative comparison performance charts for long gilts by start year over durations 10 years and 15 years.