The most significant character of gilt funds is that they don’t really bear any risk of non-payment of interest or principal. But since these funds put their money in government debt paper, the borrowing often happens over a long horizon. When these securities mature, the fund gets the payout and returns the securities.
There are more than 20 gilt funds in India.
SBI Magnum Gilt Fund, DSP Gilt Fund, ICICI Prudential Gilt Fund, Bandhan GSF Investment Fund, Kotak Gilt Investment Fund, Edelweiss Government Securities Fund are some of the popular gilt funds in the country.
Investment in Gilt Funds in June
According to data from AMFI (Association of Mutual Funds in India) at the end of June 2024, the total number of folios in Gilt Funds stood at 1,89,771.
The total funds mobilised by Gilt Funds in the month of June was Rs 1,744.38 crore. The net assets under management as on June 30, 2024 by Gilt Funds was 31,752.37 crore.
Who are they suitable for
Gilt funds are suitable for conservative investors. They are safe and provide reasonable returns.
Most gilt funds provide returns in the range of 6.5-7.5% over a period of 5 years.
When are these particularly favourable
Gilt funds are good for investment when key interest rates in the economy are set to decline.
The investor should have an investment period of about 3-5 years.
Since the government is going for fiscal tightening and the interest rate cycle is not expected to go up, these funds are likely to register gains.
Experts say that during crucial economic events they could witness some volatility.
Future of interest rates in India
If inflation remains within control – food inflation is the key villain here – the Reserve Bank of India (RBI) could go for rate cuts of about 25 basis points (or 0.24 percentage point) later this year.
The JP Morgan Global Bond Index for Emerging Markets has included Indian government bonds in it and the weightage is being increased progressively. It is viewed as a significantly positive development for this sector.
(Disclaimer: This article is only meant to provide information. News9live.com does not recommend buying or selling shares or subscriptions of any IPO and Mutual Funds.)
Debt mutual funds that invest primarily in government securities are referred to as debt funds. They are affected by interest rate movements in the economy. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
