Gilt Mutual Funds

Gilt funds prioritize investments in government security instruments issued by the government to finance its operations. Backed by the full faith and credit of the government, gilt funds are considered among the least risky investment options, offering a steady stream of income and capital preservation.

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What are Gilt Mutual Funds?

Gilt funds are a type of debt mutual fund that invests primarily in government securities. These securities are considered to be the safest investment in the country, as they are backed by the government’s credit. 

Best Gilt Mutual Funds

Best Gilt Mutual Funds With 1 Year Returns 
Fund Name  Returns  Fund Size 
ICICI Prudential Gilt Fund 5.85% ₹4,143 Crs
SBI Magnum Gilt Fund 4.42% ₹7,268 Crs
Kotak Gilt Investment Fund 3.63% ₹2,709 Crs
PGIM India Gilt Fund 3.62% ₹129 Crs
HDFC Gilt Fund 3.30% ₹2,081 Crs
Best Gilt Mutual Funds With 3 Years Returns
Fund Name  Returns  Fund Size 
ICICI Prudential Gilt Fund 6.74% ₹4,143 Crs
SBI Magnum Gilt Fund 6.13% ₹7,268 Crs
Kotak Gilt Investment Fund 5.74% ₹2,709 Crs
DSP Government Securities Fund 5.27% ₹582 Crs
Tata Gilt Securities Fund 5.20% ₹304 Crs
Best Gilt Mutual Funds With 5 Years Returns
Fund Name  Returns  Fund Size 
ICICI Prudential Gilt Fund 7.27% ₹4,143 Crs
SBI Magnum Gilt Fund 6.84% ₹7,268 Crs
Kotak Gilt Investment Fund 6.58% ₹2,709 Crs
DSP Government Securities Fund 6.37% ₹582 Crs
Edelweiss Government Securities Fund 6.24% ₹135 Crs

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

What are the Advantages of Gilt Mutual Funds?

Advantages of the Gilt Mutual Funds are:

  • Low risk: Gilt funds are considered to be one of the lowest-risk types of mutual funds. This is because they invest in government securities, which are backed by the full faith and credit of the government. As a result, gilt funds are less likely to lose value than other types of investments, such as stocks. 

  • Stable returns: Gilt funds have a stable and predictable return stream. This is because they are less affected by fluctuations in the stock market. As a result, gilt funds can be a good option for investors who are looking for a steady stream of income.

  • Capital preservation: Gilt funds can be a good way to preserve capital. This is because they are less likely to lose value than other types of investments. As a result, gilt funds can be a good option for investors who are nearing retirement or who have a low risk tolerance.

  • Diversification: Gilt funds can be used to diversify a portfolio. This is because they have a low correlation to other asset classes, such as stocks. As a result, adding gilt funds to a portfolio can help to reduce overall risk.

  • Tax benefits: Gilt funds are eligible for certain tax benefits in India. For example, long-term capital gains on gilt funds are taxed at a lower rate than short-term capital gains.

  • Transparency: Gilt funds are highly transparent. Investors can easily access information about the fund's holdings, performance, and fees.

  • Liquidity: Gilt funds are highly liquid. This means that investors can easily buy and sell units of the fund.

How Gilt Funds Work?

Gilt funds work by investing in government securities, which are debt instruments issued by the government to raise funds. These securities typically have a fixed maturity date and pay a fixed interest rate. When you invest in a gilt fund, you are buying units of the fund, which represent a portion of the fund's assets. The fund manager uses the money from investors to purchase government securities. The fund then earns income from the interest payments on these securities. This income is distributed to investors in the form of dividends or reinvested in the fund.

Who Should Invest in Gilt Funds?

Gilt funds can be a good investment option for a variety of investors, including:

  • Risk-averse investors: Gilt funds are considered to be one of the lowest-risk types of mutual funds. This is because they invest in government securities, which are backed by the full faith and credit of the government. As a result, gilt funds are less likely to lose value than other types of investments, such as stocks.

  • Investors who are nearing retirement: Gilt funds can be a good option for investors who are nearing retirement and are looking to preserve their capital. This is because they are less likely to lose value than other types of investments. Additionally, the regular income stream from gilt funds can provide a steady source of income for retirees.

  • Investors who are new to the debt market: Gilt funds are a good option for investors who are new to the debt market because they are relatively easy to understand and invest in. Additionally, gilt funds are less volatile than other types of debt funds.

  • Investors who are looking for a steady stream of income: Gilt funds can generate a steady stream of income from the interest payments on the government securities that they invest in. This income can be distributed to investors in the form of dividends or reinvested in the fund.

Conclusion

In the dynamic and often unpredictable world of investments, gilt funds emerge as a way of stability and long-term growth. These debt mutual funds, with their focus on government securities, offer a unique blend of low risk, consistent returns, and capital preservation, making them an ideal choice for investors seeking a secure option for their hard-earned money.

FAQ's

  • Are gilt funds safe in India?

    Gilt funds are considered to be one of the safest types of investments in India. This is because they invest in government securities, which are backed by the full faith and credit of the government. As a result, gilt funds are less likely to lose value than other types of investments, such as stocks.
  • Which gilt fund is best?

    Some of the best-performing gilt funds in India include:
    • ICICI Prudential Gilt Fund 

    • HDFC Gilt Fund

    • SBI Magnum Gilt Fund

    • Axis Gilt Fund

*All savings are provided by the insurer as per the IRDAI approved insurance plan.
*Tax benefit is subject to changes in tax laws. Standard T&C Apply
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

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