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Best Gilt Mutual Funds

Gilt mutual funds predominantly invest in government bonds and securities with varying maturity tenures and coupon rates. The name “gilt” comes from gilded-edged certificates since previously, government bonds and securities were issued in golden-edged certificates. The RBI issues this category of bonds and securities on behalf of the Central government to finance various development projects.

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List of Gilt Mutual Funds in India

Fund NameCategoryRisk1Y ReturnsRatingFund Size(in Cr)
Edelweiss Government Securities FundDebtLow to Moderate2.1%5₹112
DSP Government Securities FundDebtLow to Moderate2.3%4₹412
SBI Magnum Gilt FundDebtLow to Moderate2.5%4₹3,530
Axis Gilt FundDebtLow to Moderate1.8%4₹127
IDFC Government Securities Investment Plan FundDebtModerate1.2%4₹1,426
Aditya Birla Sun Life Government Securities FundDebtModerate2.0%4₹1,108
LIC MF Govt. Securities FundDebtLow to Moderate1.6%4₹56
ICICI Prudential Gilt FundDebtLow to Moderate3.2%3₹2,327
Kotak Gilt Investment PF & Trust FundDebtLow to Moderate2.3%3₹1,646
Nippon India Gilt Securities FundDebtModerate1.3%3₹1,232
Nippon India Gilt Securities FundDebtModerate1.3%3₹1,232
UTI Gilt FundDebtLow to Moderate1.8%3₹543
PGIM India Gilt FundDebtLow to Moderate2.5%3₹146
Canara Robeco Gilt FundDebtModerate1.6%3₹83
HDFC Gilt FundDebtModerate1.2%3₹1,559
View All

Features of Gilt Mutual Fund

Types: There are two classifications of this sub-type of debt Mutal Funds. One type invests in government schemes with various maturity periods. The other kind invests 80% of the assets in government bonds with a constant maturity tenure of 10 years.

Asset allocation: According to the SEBI rules, the best gilt mutual funds must invest at least 80% of their assets in government bonds and securities. 

Risk-reward ratio: Gilt funds carry nominal default risk since these invest significantly in government securities. However, they carry a high-interest rate risk. The value of the underlying securities is inversely proportionate to RBI’s monetary policy. Therefore, when the apex bank reduces its policy rates, the demand for these securities shoot up as they carry a higher interest rate and vice versa. The best gilt mutual funds generate stable returns, reciprocating the overall low risk associated with the constituent securities. 

Taxability

Long-term Capital Gains Tax: Capital gains generated after an investment period of 36 months attract a 20% LTCGT, irrespective of the amount. Long-term capital gains on gilt funds are also liable for indexation benefits, which accrues as long as one remains invested. Without indexation benefit, this rate is 10%. 

Short-term Capital Gains Tax: On the other hand, returns earned from gilt fund units sold within 3 years are classified as STCG. This amount is added to an investor’s annual taxable income, and they are liable to pay taxes as per their income slab.

TDS: Income from the best gilt mutual funds 2022 is not liable for TDS or tax deducted at the source. 

Who Are These Funds Suited For?

The best gilt mutual funds are suitable for investors with a low-risk capacity and a mid to long-term investment horizon. Unlike bond funds, where asset allocation may include investments in corporate bonds, the focus here is on government-issued securities. Therefore, the chances of default are significantly low. These funds can suit objectives of capital preservation alongside moderate returns.

However, it’s essential to note that timing is of the utmost significance in the case of gilt funds. These MFs are sensitive to RBI’s policy rate movements. Resultantly, they perform well during falling interest rates and suffer when policy rates pick up. Having a sound knowledge of the money or bond market may be a necessary factor when investing in this type of mutual fund scheme.

Besides, here are some points to consider before investing in the best gilt mutual funds.

Investment objective: One must evaluate a particular scheme’s objectives before making an investment. Clarity on this matter will aid individuals to choose an investment method that can match their financial goals within the stipulated time.

Economic outlook: Investors may want to reckon the macroeconomic prospects before investing in gilt funds. Although these funds are virtually immune to market and credit risks, they are susceptible to policy rate fluctuations. Weak macroeconomic prospects favour gilt funds because there’s a less significant probability of RBI increasing interest rates. Conversely, a strong outlook may not bode well for even the best gilt mutual fund because of increased chances of RBI upping the interest rates. 

Previous performance of a fund: Even though the past performance of a fund does not foretell its future returns, it is still imperative to perform due diligence. Reviewing the performance of a fund can allow investors an insight into its overall performance under various macroeconomic conditions.

Experience of the fund manager: Since a fund manager is responsible for any investment, it is necessary to check his/her previous experience before investing. This will help investors gauge whether the person in charge has enough experience to navigate through difficult market conditions.

Expense ratio: The expense ratio represents the aggregated cost of maintaining a fund, which is then deducted from returns. Since this ratio alters from one scheme to another, it is ideal to look into it before investing.

Exit load: Investors are liable to pay an additional fee if they leave a scheme before a pre-defined period, as mentioned in scheme-related papers. Nonetheless, this charge and its particulars differ across schemes. Some schemes may not involve any exit load. 

Major Advantages

Here are some major advantages of investing in the top gilt mutual funds –

Low credit risk: Since gilt funds invest in government bonds and securities, they carry minimal credit risks, unlike mutual funds that invest in corporate bonds. 

Capital protection: Chances of capital loss with the best gilt funds is minimal as they invest significantly in government-backed securities.

Reasonable returns: Gilt funds offer significant returns over a mid to long period. 

Flexible investment modes: One can invest in gilt funds in one of two ways – SIP and lump sum. A Systematic Investment Plan is where investors deposit a fixed sum periodically. This sum can be as low as Rs.100. The lump-sum mode requires one to deposit their investment only once.

Let's have a closer look

Now let us jump and check about these top 10 mutual fund schemes.

Edelweiss Government Securities Fund Direct Growth

Fund Performance: The Edelweiss Government Securities Fund has given 8.9% annualized returns in the past three years and 8% in the last 5 years. The Edelweiss Government Securities Fund belongs to the Debt category of Edelweiss Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Edelweiss Government Securities Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹112Cr
1Y Returns2.1%

DSP Government Securities Direct Plan Growth

Fund Performance: The DSP Government Securities Fund has given 8.73% annualized returns in the past three years and 7.83% in the last 5 years. The DSP Government Securities Fund belongs to the Debt category of DSP Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in DSP Government Securities Fund via lump sum is ₹500 and via SIP is ₹500.

Min Investment Amt₹500
AUM₹412Cr
1Y Returns2.3%

SBI Magnum Gilt Fund Direct Growth

Fund Performance: The SBI Magnum Gilt Fund has given 8.62% annualized returns in the past three years and 7.45% in the last 5 years. The SBI Magnum Gilt Fund belongs to the Debt category of SBI Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in SBI Magnum Gilt Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹3,530Cr
1Y Returns2.5%

Axis Gilt Fund Direct Plan Growth

Fund Performance: The Axis Gilt Fund has given 8.53% annualized returns in the past three years and 7.19% in the last 5 years. The Axis Gilt Fund belongs to the Debt category of Axis Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Axis Gilt Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹127Cr
1Y Returns1.8%

IDFC Government Securities Investment Plan Direct Growth

Fund Performance: The IDFC Government Securities Investment Plan Fund has given 8.48% annualized returns in the past three years and 7.63% in the last 5 years. The IDFC Government Securities Investment Plan Fund belongs to the Debt category of IDFC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in IDFC Government Securities Investment Plan Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹1,426Cr
1Y Returns1.2%

Aditya Birla Sun Life Government Securities Fund Direct Plan Growth

Fund Performance: The Aditya Birla Sun Life Government Securities Fund has given 8.04% annualized returns in the past three years and 7.44% in the last 5 years. The Aditya Birla Sun Life Government Securities Fund belongs to the Debt category of Aditya Birla Sun Life Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Aditya Birla Sun Life Government Securities Fund via lump sum is ₹1,000 and via SIP is ₹1,000.

Min Investment Amt₹1,000
AUM₹1,108Cr
1Y Returns2.0%

LIC MF Govt. Securities Fund Direct Growth

Fund Performance: The LIC MF Govt. Securities Fund has given 7.73% annualized returns in the past three years and 7.1% in the last 5 years. The LIC MF Govt. Securities Fund belongs to the Debt category of LIC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in LIC MF Govt. Securities Fund via lump sum is ₹10,000 and via SIP is ₹1,000.

Min Investment Amt₹10,000
AUM₹56Cr
1Y Returns1.6%

ICICI Prudential Gilt Fund Direct Plan Growth

Fund Performance: The ICICI Prudential Gilt Fund has given 8.56% annualized returns in the past three years and 7.86% in the last 5 years. The ICICI Prudential Gilt Fund belongs to the Debt category of ICICI Prudential Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Gilt Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹2,327Cr
1Y Returns3.2%

Kotak Gilt Investment PF & Trust Direct Growth

Fund Performance: The Kotak Gilt Investment PF & Trust Fund has given 8.14% annualized returns in the past three years and 7.48% in the last 5 years. The Kotak Gilt Investment PF & Trust Fund belongs to the Debt category of Kotak Mahindra Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Kotak Gilt Investment PF & Trust Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹1,646Cr
1Y Returns2.3%

Nippon India Gilt Securities Fund Direct Growth

Fund Performance: The Nippon India Gilt Securities Fund has given 7.81% annualized returns in the past three years and 7.77% in the last 5 years. The Nippon India Gilt Securities Fund belongs to the Debt category of Nippon India Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Nippon India Gilt Securities Fund via lump sum is ₹5,000 and via SIP is ₹100.

Min Investment Amt₹5,000
AUM₹1,232Cr
1Y Returns1.3%

Nippon India Gilt Securities Fund Direct Defined Maturity Date Growth

Fund Performance: The Nippon India Gilt Securities Fund has given 7.81% annualized returns in the past three years and 7.77% in the last 5 years. The Nippon India Gilt Securities Fund belongs to the Debt category of Nippon India Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Nippon India Gilt Securities Fund via lump sum is ₹5,000 and via SIP is ₹100.

Min Investment Amt₹5,000
AUM₹1,232Cr
1Y Returns1.3%

UTI Gilt Fund Direct Growth

Fund Performance: The UTI Gilt Fund has given 7.24% annualized returns in the past three years and 6.54% in the last 5 years. The UTI Gilt Fund belongs to the Debt category of UTI Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in UTI Gilt Fund via lump sum is ₹5,000 and via SIP is ₹500.

Min Investment Amt₹5,000
AUM₹543Cr
1Y Returns1.8%

PGIM India Gilt Direct Plan Growth

Fund Performance: The PGIM India Gilt Fund has given 7.22% annualized returns in the past three years and 6.86% in the last 5 years. The PGIM India Gilt Fund belongs to the Debt category of PGIM India Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in PGIM India Gilt Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹146Cr
1Y Returns2.5%

Canara Robeco Gilt Fund Direct Growth

Fund Performance: The Canara Robeco Gilt Fund has given 7.01% annualized returns in the past three years and 6.14% in the last 5 years. The Canara Robeco Gilt Fund belongs to the Debt category of Canara Robeco Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Canara Robeco Gilt Fund via lump sum is ₹5,000 and via SIP is ₹1,000.

Min Investment Amt₹5,000
AUM₹83Cr
1Y Returns1.6%

HDFC Gilt Fund Direct Plan Growth

Fund Performance: The HDFC Gilt Fund has given 6.11% annualized returns in the past three years and 5.91% in the last 5 years. The HDFC Gilt Fund belongs to the Debt category of HDFC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in HDFC Gilt Fund via lump sum is ₹5,000 and via SIP is ₹300.

Min Investment Amt₹5,000
AUM₹1,559Cr
1Y Returns1.2%

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