50. As a general rule, securities which are consistently attractive to a wide variety of investors are the most liquid. It is fair to say that a sovereign Treasury Stock is likely to have the largest universe of potential investors compared with other types of security. Gilts are credit risk free and depending on an investor's time horizon can be seen as cash equivalent. Gilts are eligible investments for most portfolios and even equity fund managers will put surplus cash into the Gilt market or switch out of shares into Gilts when they are nervous of the equity markets. In addition:
■ overseas investors will hold Gilts as a risk free exposure to sterling;
■ retail investors are substantial buyers of Gilts. Market makers specialising in retail sales of Gilts believe that retail investors may account for up to 10% of Gilt sales;
■ corporate investors may keep cash balances in short Gilts or use them to collateralise sinking funds;
■ banks - Gilts are used to hedge underwriting positions and as the underlying deliverable instrument in the swaps and derivatives market.