What are Gilt Mutual Funds?
Gilt mutual funds, often referred to as government securities funds, primarily invest in government securities or treasury bills issued by the central government or state governments. These funds are designed to provide investors with a relatively low-risk investment avenue.
Features of Gilt Funds
Government-backed funds
Variety in duration
High liquidity
Benefits of Investing inGilt Mutual Funds
Adaptive nature
Transparent mechanism
Predictable returns
Suitable as a defensive Strategy
Who Should Invest inGilt Mutual Funds
Conservative InvestorsFor those cautious of market volatility and seeking a stable returns environment, the Long Duration Gilt Funds are ideal. They primarily invest in government securities, ensuring steady returns and minimising risk over an extended period.
- Moderate Investors
A medley of medium to long-term Gilt funds can strike the right balance, ensuring a mix of stability and appreciable returns. These funds alter their portfolio based on interest rate predictions, allowing for a mix of stability and growth.
Aggressive InvestorsWhile their primary focus might be high-return equities, aggressive investors can still find a place for Gilt funds in their portfolio for balance. The Short Duration Gilt Funds provide them with an opportunity to capitalise on short-term interest rate movements without excessive exposure to risks, acting as a counterbalance to their high-risk investments.
Top Performing mutual funds
| Scheme Name | 5 Y | Value Research | ||||
|---|---|---|---|---|---|---|
 ICICI Pru Gilt Fund - Direct (G) | 7.87% | Invest Now | ||||
ICICI Pru Gilt Fund - Direct (IDCW) | 7.87% | Invest Now | ||||
 SBI Magnum Gilt Fund - Direct (G) | 7.51% | Invest Now | ||||
ICICI Pru Gilt Fund (G) | 7.28% | Invest Now | ||||
FAQs
What differentiates Gilt mutual funds from other investment categories?
Gilt mutual funds primarily concentrate on government securities, offering investors a more secure risk profile compared to other funds, making them stand out in the investment landscape.
Is there an assurance of returns when investing in top Gilt funds?
While these funds invest predominantly in government securities, which are considered safe, it's crucial to understand that returns are not guaranteed. However, they provide a safer investment avenue, especially when focusing on the best Gilt funds.
How does the tax structure treat Gilt fund returns?
Gilt fund returns in India are treated as debt mutual fund returns for taxation. Short-term capital gains are taxed according to your income tax slab. In contrast, long-term gains attract a tax of 20% with indexation benefits.
Given market fluctuations, how susceptible are long-term Gilt funds?
Gilt funds, especially long-term Gilt funds, due to their significant investment in government securities, tend to exhibit lower volatility compared to equity-based funds. This makes them a more stable choice amidst market uncertainties.
When evaluating options, what criteria should be considered to select the best Gilt funds?
Selection should be informed by factors such as the historical performance of the fund, the expertise and track record of the fund manager, and the fund's duration. To streamline this process and make informed choices, consider using expert advisory services or platforms like m.stock.