Debt mutual funds form an integral part of a well-diversified portfolio, offering stability and predictable returns. Among them, gilt funds occupy a special place due to their sovereign backing and relatively lower credit risk. Gilt with 10-year Constant Duration Mutual Funds offers investors an opportunity to participate in government securities while targeting a consistent maturity profile.
A gilt fund is a type of debt mutual fund that invests 80% of its funds primarily in government securities issued by the central or state governments. These securities carry minimal credit risk as the government backs them.
A Gilt with 10-year Constant Duration Mutual Fund is a specific type of gilt fund that maintains an average portfolio maturity of around 10 years at all times. The fund manager actively manages the portfolio to keep the duration close to 10 years by buying and selling securities as they near maturity.
Since the value of long-duration bonds is sensitive to interest rate movements, these funds can benefit significantly when interest rates decline and may face volatility when rates rise. They are ideal for investors seeking long-term exposure to government bonds with relatively low credit risk.
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| Fund Name | Category | Risk | NAV | Expense Ratio | 1Y Returns | 3Y Returns | 5Y Returns | Rating | Fund Size (in Cr) | Exit Load |
|---|---|---|---|---|---|---|---|---|---|---|
Bandhan Government Securities Fund | Debt | Moderate | 47.30 | 0.26 | 8.3% | 8.8% | 5.6% | -- | ₹345 | - |
ICICI Prudential Constant Maturity Gilt Fund | Debt | Moderate | 25.66 | 0.25 | 8.4% | 8.7% | 5.8% | -- | ₹2,584 | - |
UTI Gilt Fund | Debt | Moderate | 12.97 | 0.22 | 7.9% | 8.6% | NA | -- | ₹140 | - |
SBI Magnum Constant Maturity Fund | Debt | Moderate | 67.27 | 0.31 | 7.9% | 8.6% | 5.8% | -- | ₹1,861 | - |
DSP 10Y G-Sec Fund | Debt | Moderate | 22.64 | 0.31 | 7.6% | 8.4% | 5.0% | -- | ₹53 | - |
| View All | ||||||||||
Gilt with 10-year constant duration funds are most suitable for:
Here are some key points to evaluate before investing:
The performance of these funds is closely tied to interest rate movements. Falling interest rates lead to capital appreciation, while rising rates can reduce bond prices and returns.
Since the average maturity is around 10 years, these funds carry high duration risk. Even small changes in interest rates can lead to significant price fluctuations, making them more volatile than short-term debt funds.
Given their sensitivity to interest rate changes, these funds are best suited for investors with a long-term horizon. Staying invested for at least 5 years helps average out short-term volatility.
While gilt funds offer stable returns in the long run, they may experience short-term fluctuations due to interest rate movements. Investors should align their return expectations accordingly.
Since these funds invest exclusively in government securities, the risk of default is virtually zero. This makes them one of the safest debt investment options.
With their longer duration, these funds can deliver significant capital gains when interest rates decline, as bond prices tend to rise.
Adding gilt funds to a portfolio enhances diversification by balancing equity market volatility with stable, government-backed debt instruments.
These funds are actively managed by professionals who adjust the portfolio to maintain the 10-year duration, helping investors benefit from changing interest rate cycles.
The biggest risk with these funds is their sensitivity to interest rate changes. Rising interest rates can lead to a decline in bond prices, which can affect short-term performance.
Although gilt funds carry minimal credit risk, they can be more volatile than other debt funds due to their longer duration. Short-term fluctuations in returns are common.
While government securities are highly liquid, market conditions can sometimes affect liquidity, impacting fund performance and redemption timelines.
Gilt with 10-year constant duration mutual funds are debt funds, and gains on them are taxed similarly to other debt funds. Regardless of the holding period, the gains are added to the investor’s income and taxed at the applicable income tax rate.
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Fund Performance: The Bandhan Government Securities Fund has given 8.84% annualized returns in the past three years and 5.6% in the last 5 years. The Bandhan Government Securities Fund comes under the Debt category of IDFC Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in Bandhan Government Securities Fund via lump sum is ₹1,000 and via SIP is ₹100.
| Min Investment Amt | ₹1,000 |
|---|---|
| AUM | ₹345Cr |
| 1Y Returns | 8.3% |
Fund Performance: The ICICI Prudential Constant Maturity Gilt Fund has given 8.74% annualized returns in the past three years and 5.85% in the last 5 years. The ICICI Prudential Constant Maturity Gilt Fund comes under the Debt category of ICICI Prudential Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Constant Maturity Gilt Fund via lump sum is ₹5,000 and via SIP is ₹1,000.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹2,584Cr |
| 1Y Returns | 8.4% |
Fund Performance: The UTI Gilt Fund comes under 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 | ₹140Cr |
| 1Y Returns | 7.9% |
Fund Performance: The SBI Magnum Constant Maturity Fund has given 8.63% annualized returns in the past three years and 5.8% in the last 5 years. The SBI Magnum Constant Maturity Fund comes under the Debt category of SBI Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in SBI Magnum Constant Maturity Fund via lump sum is ₹5,000 and via SIP is ₹500.
| Min Investment Amt | ₹5,000 |
|---|---|
| AUM | ₹1,861Cr |
| 1Y Returns | 7.9% |
Fund Performance: The DSP 10Y G-Sec Fund has given 8.45% annualized returns in the past three years and 4.99% in the last 5 years. The DSP 10Y G-Sec Fund comes under the Debt category of DSP Mutual Funds.
Minimum Investment Amount: The minimum amount required to invest in DSP 10Y G-Sec Fund via lump sum is ₹100 and via SIP is ₹100.
| Min Investment Amt | ₹100 |
|---|---|
| AUM | ₹53Cr |
| 1Y Returns | 7.6% |
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