The Best Guide To Gilt Funds: Explore The Benefits

The Best Guide To Gilt Funds: Explore The Benefits


Gilt funds are those which provide moderate returns and are safe. These are  invested in the fixed income securities which are issued by the Indian Government with almost ZERO risks to the investor. The returns range in-between 8%-10% or more (depending upon the area of investment).

Benefits of investing in Gilt Funds

Investments under gilt fund are less risky as compared to corporate bonds while offering better returns than direct investment. As the larger part of capital is parked in the government securities, the credit risk is minimum to a larger extent.

Under gilt mutual fund investment, you will be aided to slice your tax-liability.

Every common man can’t have the capacity to invest directly in government securities. Thus, with gilt funds they can enjoy the benefit(s) of investment in government securities with a minimal amount of INR 5000.

With gilt funds, capital is in Safe Hands. You can expect guaranteed returns from the gilt fund because Reserve Bank of India (RBI) plays an importantl role in gilt funds.

Who Should Invest in Gilt Funds?

Gilt Funds are especially meant for those investors who want to satisfy their security needs. These funds satisfy the security needs of the investsor as most of the funds are invested in government securities. These funds are preferred by those individuals who prefer safety of their investment rather than higher returns. Before investing in Gilt funds, an investor should note down certain points in mind that it’s better to buy the Gilt Fund at the time of falling interest rate scenario as an investor can benefit a lot at that time from capital gains.

How Gilt Funds Works?

Gilt fund are mutual funds that invest in government securities, so, whenever a Government,  in this case “Government of India“ requires any fund  they approach the RBI. RBI acts as a banker to the Government of India and lends money to them. In return of the loan taken, the RBI issues government securities having a specific tenure, which are subscribed by the fund manager of the respective gilt fund. After a certain period of maturity, the gilt fund returns the government securities and receives the money in return.

Best Gilt Funds to invest

There are various quantitative and qualitative factors to determine the best gilt fund . You need to keep your risk appetite ,financial goals, and investment horizon in mind.

The following represents the top 5 gilt funds in India

Aditya Birla SL G-Sec Fund (G):Returns 3Y:  9.23%

Edelweiss Government Sec Fund (G) :Return 3Y: 7.89%

L&T Gilt Fund (G)- Direct Plan : Return 3Y: 8.36%

DSP G-sec Fund (G)- Direct Plan : Return 3Y:  8.7%

Baroda Gilt Fund (G) – Direct: Return 3Y: 7.4%


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