gilt-mutual-funds

What are Gilt Funds

If you fall into the category of investing in the funds that provide moderate returns and are safe, then prefer going for gilt funds. Gilt mutual funds are invested in the fixed income securities which are issued by the Indian Government with almost ZERO risks to the investor. However, the returns range in-between 8%-10% or more (depending upon the area of investment).

Top 5 Gilt Mutual Funds

Aditya Birla SL G-Sec Fund (G)

Mutual Fund 5 Star

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%

  • Past Performance Is No Guarantee of Future Results

BENEFITS

  • Investment under gilt fund is less risky than 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 minimal to a larger extent.
  • Under gilt mutual fund investment, it will aid you to slice your tax-liability.
  • Every common man can’t have a happy pocket to invest directly in government securities. Thus, they can enjoy the benefit(s) of investment in government securities with a minimal amount of INR 5000.
  • Your capital is in Safe Hands. You can expect guaranteed returns from the gilt fund because Reserve Bank of India (RBI) plays a vital role in gilt funds.

Who Should Invest in Gilt Funds?

 

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

 

How to Invest in Gilt Funds with Gulaq

Investing in gilt securities can be a jittery activity, especially when the market is not your thing and finding it difficult to understand. The remedy to this is Gulaq where you can easily sign-up with free KYC, zero commission, zero charges, and different funds according to your goals, risks, returns, horizons, etc. Precisely, you can invest in hand-picked funds in a paperless and hassle-free manner.

How Gilt Funds Works?

Gilt fund are mutual funds that invest in government securities. So, whenever a Government, here in case “Government of India“ requires any fund then they approach the RBI. RBI act as a banker to the Government of India and lend money to them. So, RBI lends the money to the government. In return of the loan, the RBI issued 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 receive the money in return.

Frequently Asked Questions

Can Gilt funds give negative returns?

There are less chances that gilt funds give negative returns.

What are top Gilt Funds in India?

The top five Gilt funds in India are: –

    • Reliance Gilt Securities Fund
    • SBI Magnum Constant Maturity Fund
    • IDFC Government Securities Fund
    • ICICI Prudential Gilt Fund
    • Aditya Birla Sun Life Government Securities Fund

Are Gilt Funds Good?

It’s one of the safest investments to have. As Gilt Funds are backed by government, thus the risk of loss is quite minimum. More so, it provides consistent returns to their investor.

How Gilt funds work?

Gilt fund are mutual funds that invest in government securities. So, whenever a Government here in case “Government of India“ requires any fund then they approach the RBI. Then RBI acts as a banker to the government of India and lends money to them. So, RBI lends the money to the government. In return of the loan, 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.

What are top Gilt Funds in India?

The top Gilt funds in India are: –  

  • Edelweiss Gilt securities Fund 
  • Reliance Gilt Securities Fund
  • L&T Gilt Fund 
  • Aditya Birla Sun Life Government Securities Fund 

Is Gilt Fund Safe?

Gilt Funds are one of the safest investments to invest. As it is backed by Government and they hardly default on their obligations.  

How to invest in Gilt Funds in India.

Investing in Gilt Funds in India is simple and easy. The user just needs to follow these procedures: 

  •  Go to the Gulaq.com website. 
  • Now get your KYC done in less than 5 minutes. 
  • Then enter all the personal details regarding the amount of investment and time period. 

What is the average Gilt Fund returns?

Gilt Funds have provided moderate returns to their investor. When you look at their returns over 3,5 and 10-year time periods, their average returns have been 11.6%, 9.7% and 8.5% respectively.  

List of top Gilt Edge Funds in India?

Gilt Edge Funds are high grade investment bonds that are issued by the government. Here is the list of top Gilt Edge Funds in India.  

  • Reliance Gilt Securities Fund- Direct Plan 
  • BNP Paribas Government Securities Fund – Direct Plan (G) 
  • Kotak Gilt Investment Plan – Regular – Direct Plan (G) 

Examples of Gilt Fund.

Here is the list of some top Gilt Funds by CRISIL  

  • ICICI Prudential Gilt Fund – PF option 
  • Aditya Birla Sun Life Government Securities Fund 
  • DHFL Pramerica Gilt Fund 
  • Reliance Gilt Securities Fund 

Does Gilt Funds provides negative returns?

Yes, Gilt Funds can provide negative returns.

Gilt Funds vs Liquid Funds

Gilt Funds:     

  • Gilt Funds provide returns of between 7% to 9%. 
  • Liquidity is quite high in case of Gilt Funds. 
  • The expense ratio is quite nominal.

Liquid Funds  

  •  Liquid funds provide returns up to 7%. 
  •  It has no lock in period, so investor can take out their money. 
  •  Most of the liquid funds don’t have any exit or entry load. 

Gilt Funds Vs Income Funds

Gilt Funds :  

  • Gilt Funds provide an annual return of about 7 to 9% respectively. 
  • Gilt Funds have less risk factor and high liquidity 
  • Gilt Funds charge a certain amount of nominal fee as expense ratios.

Income Funds:   

  • Income funds generally generate returns in the range of 7.5 % to 9 %. 
  • Income funds have more risk factor. 
  • Income funds are tax efficient than fixed deposits 

Is Gilt Funds suitable for investor?

yeah, Gilt funds are quite suitable for investors. Especially, those who want to take less risk.

When to Invest in Gilt Funds?

Generally, there is no perfect time to invest in Gilt Funds. But it’s better if anyone invest during falling interest rate scenario.

What are gilt edged funds?

Gilt edged funds are basically government securities or the securities guaranteed by the government. Since Government cannot default on its payment obligations, the government securities are risk free and hence known as “Gilt-edged fund ‘’.  The securities issued by government or guaranteed by the government are considered risk free.

Who should Invest in Gilt Funds?

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

Which type of investor need to invest in Gilt fund?

Investor who are risk averse and try to secure their capital with moderate returns. It is an ideal investment for those who want to invest in Government securities.  

Is Gilt Funds Tax Free?

No, Capital gains from the Gilt fund are taxable. The rate of taxation is based upon your holding period. 

List of best Gilt Fund to invest in 2019

Here’s a list of best Gilt Fund to invest in 2019  

  • Reliance Gilt Securities Fund 
  • SBI Magnum Constant Maturity Fund
  • Aditya Birla Government Securities Fund 
  • SBI Magnum Gilt Fund 
  • UTI Gilt Fund 

What is Gilt Money market Mutual Fund?

Gilt Money market Funds are short term liquid investment which invests in high quality money market instrument. T- bills are issued by the Government of India to raise money for a short term of up to 365 days.  

What is Gilt Fund capital gains?

Any profit or gains made after the sale of Gilt Fund is Gilt Fund Capital Gains.  

What do Gilt Fund primarily invest in?

Gilt Fund primarily invest in the debt and government treasury bonds. 

Gilt funds vs fixed Deposits.

The difference between Gilt Funds and Fixed Deposit 

 Gilt Funds:  

  • Gilt Funds provide a moderate return between 7% to 9%. 
  • It also provides the investor to choose the dividend options. 
  • The level of the risk is quite moderate. 
  • Gilt funds have high liquidity.

Fixed Deposits:   

  • Fixed deposit provides a rate of returns between 6 % to 8%. 
  • It has got no dividend options. 
  • The level of risk is quite low and it’s one of the safest investments. 
  • Fixed Deposit has low liquidity. 

Gilt Funds Vs Debt Fund.

Gilt Funds   

  • Gilt funds invest only in government debt securities with long investment period. 
  • Investment in these funds is less risky. 
  • Returns are always between 7 to 9 % in the long-term time period.  

Debt Funds

  • Investor can invest in debt securities issued by government securities and corporate bodies. They can choose according to their needs and time period. 
  • Debt funds are volatile to interest rate risk, credit risk and liquidity risk. 
  • Returns varies from 7 to 9% is mainly dependent on RBI monetary policy. 

Is any credit risk associated with the Gilt Funds?

There is no credit risk associated with the Gilt Funds but there is always risk perceived in delay in interest payment. 

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