{"id":16993,"date":"2026-04-08T06:45:19","date_gmt":"2026-04-08T13:15:19","guid":{"rendered":"https:\/\/shoonya.com\/blog\/?p=16993"},"modified":"2026-04-08T06:45:19","modified_gmt":"2026-04-08T13:15:19","slug":"gilt-funds","status":"publish","type":"post","link":"https:\/\/shoonya.com\/blog\/gilt-funds\/","title":{"rendered":"What Are Gilt Funds and How Do They Work?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_87 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\"><p class=\"ez-toc-title\" style=\"cursor:inherit\"><\/p>\n<\/div><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/shoonya.com\/blog\/gilt-funds\/#What_are_Gilt_Funds\" >What are Gilt Funds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/shoonya.com\/blog\/gilt-funds\/#Where_are_the_Gilt_Mutual_Funds_Invested_In\" >Where are the Gilt Mutual Funds Invested In<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/shoonya.com\/blog\/gilt-funds\/#What_Are_the_Features_of_Gilt_Funds\" >What Are the Features of Gilt Funds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/shoonya.com\/blog\/gilt-funds\/#How_Do_Gilt_Funds_Work\" >How Do Gilt Funds Work?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/shoonya.com\/blog\/gilt-funds\/#What_Are_the_Risks_in_Gilt_Funds\" >What Are the Risks in Gilt Funds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/shoonya.com\/blog\/gilt-funds\/#Gilt_Funds_vs_Fixed_Deposit\" >Gilt Funds vs Fixed Deposit<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/shoonya.com\/blog\/gilt-funds\/#Gilt_Fund_Taxation\" >Gilt Fund Taxation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/shoonya.com\/blog\/gilt-funds\/#How_Long_Should_You_Invest_in_Gilt_Funds\" >How Long Should You Invest in Gilt Funds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/shoonya.com\/blog\/gilt-funds\/#What_Is_the_Difference_Between_Gilts_and_Bonds\" >What Is the Difference Between Gilts and Bonds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/shoonya.com\/blog\/gilt-funds\/#Difference_Between_Gilt_Funds_and_Fixed_Deposit\" >Difference Between Gilt Funds and Fixed Deposit<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/shoonya.com\/blog\/gilt-funds\/#Who_Should_Avoid_Gilt_Funds\" >Who Should Avoid Gilt Funds?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/shoonya.com\/blog\/gilt-funds\/#Conclusion\" >Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/shoonya.com\/blog\/gilt-funds\/#Gilt_Funds_FAQs\" >Gilt Funds: FAQs<\/a><\/li><\/ul><\/nav><\/div>\n<div class=\"yoast-breadcrumbs\"><span><span><a href=\"https:\/\/shoonya.com\/blog\/\">Home<\/a><\/span> \u00bb <span><a href=\"https:\/\/shoonya.com\/blog\/investing\/\">Investing<\/a><\/span> \u00bb <span><a href=\"https:\/\/shoonya.com\/blog\/investing\/mutual-funds\/\">Mutual Funds<\/a><\/span> \u00bb <span class=\"breadcrumb_last\" aria-current=\"page\"><strong>What Are Gilt Funds and How Do They Work?<\/strong><\/span><\/span><\/div>\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Looking for a relatively safe investment option, but unsure where to go beyond fixed deposits? Gilt funds are often considered low-risk mutual funds because they invest in government-backed securities.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But, while they offer high safety from default risk, their returns are not fixed and can fluctuate with interest rates. This makes them very different from traditional fixed-income options like FDs.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In this guide, we will explain what gilt funds are, how they work, their returns, risks, and taxation, so you can decide whether they fit your investment strategy.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_Gilt_Funds\"><\/span>What are Gilt Funds?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The term \u201cgilt\u201d comes from \u201cgilt-edged securities,\u201d which refers to investments with strong credit quality and reliability.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A gilt fund means a mutual fund that invests only in sovereign debt instruments, making it one of the safest categories in terms of default risk.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Where_are_the_Gilt_Mutual_Funds_Invested_In\"><\/span>Where are the Gilt Mutual Funds Invested In<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Gilt funds invest only in government-issued instruments, such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Government Bonds (G-Secs):<\/strong> Long-term securities issued by the RBI<\/li>\n\n\n\n<li><strong><a href=\"https:\/\/shoonya.com\/blog\/understanding-treasury-bills\/\" type=\"link\" id=\"https:\/\/shoonya.com\/blog\/understanding-treasury-bills\/\" target=\"_blank\" rel=\"noreferrer noopener\">Treasury Bills<\/a> (T-Bills):<\/strong> Short-term instruments with maturity up to 1 year<\/li>\n\n\n\n<li><strong>State Development Loans (SDLs):<\/strong> Bonds issued by state governments<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Are_the_Features_of_Gilt_Funds\"><\/span>What Are the Features of Gilt Funds?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Gilt funds have distinct characteristics that set them apart from other debt mutual funds.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>No Credit Risk:<\/strong> Since these investments are backed by the government, the risk of default is almost zero.<\/li>\n\n\n\n<li><strong>Interest Rate Sensitivity:<\/strong> Gilt fund returns are affected by changes in interest rates, which influence bond prices.<\/li>\n\n\n\n<li><strong>Market-Linked Returns:<\/strong> Returns are not fixed and can vary depending on market conditions and interest rate cycles.<\/li>\n\n\n\n<li><strong>High Liquidity:<\/strong> Investors can redeem their investments easily, with no strict lock-in periods.<\/li>\n\n\n\n<li><strong>Varied Duration Options:<\/strong> Gilt funds can invest in short-term or long-term securities, which affects their risk and return profile.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_Do_Gilt_Funds_Work\"><\/span>How Do Gilt Funds Work?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Gilt funds work by investing pooled money into government securities and earning returns through interest income and bond price movements.<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Earning Through Interest Income: <\/strong>These securities pay periodic interest, which contributes to the fund\u2019s returns.<\/li>\n\n\n\n<li><strong>Price Movement of Bonds: <\/strong>Bond prices change based on interest rates:<\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li>When interest rates fall, bond prices rise<\/li>\n\n\n\n<li>When interest rates rise, bond prices fall<\/li>\n<\/ul>\n\n\n\n<ol start=\"3\" class=\"wp-block-list\">\n<li><strong>Impact on NAV: <\/strong>The fund\u2019s <a href=\"https:\/\/shoonya.com\/blog\/what-is-nav\/\" type=\"link\" id=\"https:\/\/shoonya.com\/blog\/what-is-nav\/\" target=\"_blank\" rel=\"noreferrer noopener\">NAV<\/a> (Net Asset Value) moves based on these price changes, which affects investor returns.<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Note:<\/strong> Gilt funds do not offer fixed returns. Their performance depends on interest rate trends, making them suitable for investors who understand rate cycles.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Are_the_Risks_in_Gilt_Funds\"><\/span>What Are the Risks in Gilt Funds?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Gilt funds are considered safe from default risk, but they are not completely risk-free. Their performance depends on market conditions, especially interest rate movements.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Interest Rate Risk: <\/strong>Gilt funds are highly sensitive to changes in interest rates. When interest rates rise, bond prices fall, which can reduce the fund\u2019s value in the short term.<\/li>\n\n\n\n<li><strong>Price Volatility:<\/strong> The NAV of gilt funds can fluctuate due to market movements. These changes are more noticeable during periods of uncertainty, which can impact short-term investors.<\/li>\n\n\n\n<li><strong>Duration Risk: <\/strong>Funds that hold long-term securities are more affected by interest rate changes. This means higher potential for gains when rates fall, but also higher downside when rates rise.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Gilt_Funds_vs_Fixed_Deposit\"><\/span>Gilt Funds vs Fixed Deposit<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Gilt funds and fixed deposits are both considered relatively safe investment options, but they differ in returns, risk, and flexibility.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Basis<\/strong><\/td><td><strong>Gilt Funds<\/strong><\/td><td><strong>Fixed Deposit (FD)<\/strong><\/td><\/tr><tr><td><strong>Returns<\/strong><\/td><td>Market-linked, can vary<\/td><td>Fixed and predetermined<\/td><\/tr><tr><td><strong>Risk<\/strong><\/td><td>Interest rate risk<\/td><td>Low risk<\/td><\/tr><tr><td><strong>Safety<\/strong><\/td><td>Invest in government securities<\/td><td>Bank-backed (insured up to limit)<\/td><\/tr><tr><td><strong>Return Stability<\/strong><\/td><td>Fluctuates with the market<\/td><td>Stable and predictable<\/td><\/tr><tr><td><strong>Liquidity<\/strong><\/td><td>High can redeem anytime<\/td><td>Limited, penalty on early withdrawal<\/td><\/tr><tr><td><strong>Taxation<\/strong><\/td><td>Taxed as per the income slab<\/td><td>Interest taxed as per the slab<\/td><\/tr><tr><td><strong>Investment Horizon<\/strong><\/td><td>Suitable for medium to long-term<\/td><td>Suitable for short to medium term<\/td><\/tr><tr><td><strong>Ideal For<\/strong><\/td><td>Investors comfortable with fluctuations<\/td><td>Investors seeking stable returns<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/shoonya.com\/blog\/fd-vs-life-insurance\/\" type=\"link\" id=\"https:\/\/shoonya.com\/blog\/fd-vs-life-insurance\/\" target=\"_blank\" rel=\"noreferrer noopener\">FD vs Life Insurance<\/a>: <strong><em>Which Investment Suits Your Needs Better?<\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Gilt_Fund_Taxation\"><\/span>Gilt Fund Taxation<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Gilt funds are taxed as debt mutual funds, where any gains are added to your total income and taxed according to your income tax slab.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Unlike earlier rules, gilt funds do not offer indexation benefits, so inflation adjustment is not allowed when calculating gains.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Choosing Between <a href=\"https:\/\/shoonya.com\/blog\/growth-vs-idcw\/\" type=\"link\" id=\"https:\/\/shoonya.com\/blog\/growth-vs-idcw\/\" target=\"_blank\" rel=\"noreferrer noopener\">Growth vs. IDCW<\/a> : If you choose the growth option, returns are taxed only when you redeem your investment. If you choose the dividend (IDCW) option, the income received is taxed as per your slab in the year it is received.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This makes gilt funds less tax-efficient for investors in higher tax brackets, so it is important to consider post-tax returns before investing.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_Long_Should_You_Invest_in_Gilt_Funds\"><\/span>How Long Should You Invest in Gilt Funds?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Gilt funds are generally more suitable for a <strong>medium to long-term investment <\/strong>horizon, typically 3 to 5 years or more. This allows enough time to absorb short-term fluctuations caused by interest rate changes.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In the <strong>short term<\/strong>, gilt funds can be volatile because bond prices react to rate movements. However, over a longer period, these fluctuations tend to smooth out, improving return stability.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Gilt funds tend to perform better in a falling interest rate environment, where bond prices rise. Staying invested for a longer duration increases the chances of benefiting from such cycles.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_Is_the_Difference_Between_Gilts_and_Bonds\"><\/span>What Is the Difference Between Gilts and Bonds?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Gilts are a <a href=\"https:\/\/shoonya.com\/blog\/types-of-bonds-in-india\/\" type=\"link\" id=\"https:\/\/shoonya.com\/blog\/types-of-bonds-in-india\/\" target=\"_blank\" rel=\"noreferrer noopener\">type of bond<\/a>, but not all bonds are gilts. The key difference lies in the issuer and level of risk.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Basis<\/strong><\/td><td><strong>Gilts<\/strong><\/td><td><strong>Bonds<\/strong><\/td><\/tr><tr><td>Issuer<\/td><td>Issued by the government<\/td><td>Issued by companies, banks, or government entities<\/td><\/tr><tr><td>Credit Risk<\/td><td>No credit risk (government-backed)<\/td><td>Carry credit risk depending on the issuer<\/td><\/tr><tr><td>Returns<\/td><td>Usually lower and stable<\/td><td>Can be higher depending on risk<\/td><\/tr><tr><td>Safety<\/td><td>High safety<\/td><td>Varies based on issuer quality<\/td><\/tr><tr><td>Purpose<\/td><td>Government borrowing<\/td><td>Corporate or institutional funding<\/td><\/tr><tr><td>Examples<\/td><td>G-Secs, Treasury Bills<\/td><td>Corporate bonds, PSU bonds<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Explore About <a href=\"https:\/\/shoonya.com\/blog\/what-are-sovereign-gold-bonds\/\" type=\"link\" id=\"https:\/\/shoonya.com\/blog\/what-are-sovereign-gold-bonds\/\" target=\"_blank\" rel=\"noreferrer noopener\"><em>Sovereign Gold Bonds<\/em><\/a> in Details<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Difference_Between_Gilt_Funds_and_Fixed_Deposit\"><\/span>Difference Between Gilt Funds and Fixed Deposit<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Gilt funds offer potentially higher but variable returns, while fixed deposits provide stable and predictable income with lower risk.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Basis<\/strong><\/td><td><strong>Gilt Funds<\/strong><\/td><td><strong>Fixed Deposit (FD)<\/strong><\/td><\/tr><tr><td>Type of Investment<\/td><td>Debt mutual fund<\/td><td>Bank deposit<\/td><\/tr><tr><td>Returns<\/td><td>Market-linked, can fluctuate<\/td><td>Fixed and guaranteed<\/td><\/tr><tr><td>Risk<\/td><td>Interest rate risk<\/td><td>Very low risk<\/td><\/tr><tr><td>Safety<\/td><td>Invest in government securities<\/td><td>Bank-backed (insured up to \u20b95 lakh)<\/td><\/tr><tr><td>Return Stability<\/td><td>Can vary over time<\/td><td>Stable and predictable<\/td><\/tr><tr><td>Liquidity<\/td><td>High can redeem anytime<\/td><td>Limited, penalty on early withdrawal<\/td><\/tr><tr><td>Taxation<\/td><td>Taxed as per the income slab<\/td><td>Interest taxed as per the slab<\/td><\/tr><tr><td>Investment Horizon<\/td><td>Medium to long term<\/td><td>Short to medium term<\/td><\/tr><tr><td>Ideal For<\/td><td>Investors comfortable with fluctuations<\/td><td>Investors seeking fixed income<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_Should_Avoid_Gilt_Funds\"><\/span>Who Should Avoid Gilt Funds?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Gilt funds may not be suitable for all investors, especially those seeking short-term stability.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Short-Term Investors: <\/strong>They may not be ideal for investors with a short investment horizon, as returns can fluctuate due to interest rate movements.<\/li>\n\n\n\n<li><strong>Investors Seeking Fixed Returns: <\/strong>Gilt funds do not offer guaranteed returns, so they may not suit those who prefer predictable income, such as fixed deposits.<\/li>\n\n\n\n<li><strong>Low Risk Tolerance Investors: <\/strong>Even though there is no default risk, the NAV can fluctuate, which may not suit investors uncomfortable with market movements.<\/li>\n\n\n\n<li><strong>Investors Unfamiliar with Interest Rate Cycles: <\/strong>Gilt fund performance depends on interest rate trends, so investors unfamiliar with these cycles may find it difficult to manage expectations.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Gilt funds offer a unique balance between safety and market-linked returns, making them a suitable option for investors who want to avoid credit risk but can handle interest rate fluctuations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Unlike fixed-return instruments, the performance of floating-rate instruments depends on interest rate movements, so returns can vary in the short term. However, with the right investment horizon and timing, they can play an important role in a well-diversified portfolio.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em>Want to explore more investment options? <strong><a href=\"https:\/\/shoonya.com\/open-an-account\/?utm_source=blog&amp;utm_medium=organic&amp;utm_campaign=cta\" type=\"link\" id=\"https:\/\/shoonya.com\/open-an-account\/?utm_source=blog&amp;utm_medium=organic&amp;utm_campaign=cta\" target=\"_blank\" rel=\"noreferrer noopener\">Open a Demat account <\/a><\/strong>and invest in mutual funds with zero brokerage.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Gilt_Funds_FAQs\"><\/span>Gilt Funds: FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1775651903715\"><strong class=\"schema-faq-question\"><strong>Is a gilt fund better than an FD?<\/strong><\/strong> <p class=\"schema-faq-answer\">Gilt funds offer market-linked returns and may outperform FDs in certain conditions, but FDs provide fixed and predictable returns with lower volatility.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1775651904323\"><strong class=\"schema-faq-question\"><strong>Are gilt funds taxable in India?<\/strong><\/strong> <p class=\"schema-faq-answer\">Yes, gilt funds are taxed as debt mutual funds, and gains are added to your income and taxed as per your slab rate.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1775651904836\"><strong class=\"schema-faq-question\"><strong>What is the difference between gilts and bonds?<\/strong><\/strong> <p class=\"schema-faq-answer\">Gilts are government-issued bonds with no credit risk, whereas corporate bonds may carry credit risk.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1775651949782\"><strong class=\"schema-faq-question\"><strong>What is the minimum investment for gilt funds?<\/strong><\/strong> <p class=\"schema-faq-answer\">You can start investing in gilt funds with as little as \u20b9500 through SIP or lump sum, depending on the fund.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1775651951469\"><strong class=\"schema-faq-question\"><strong>Which is the oldest gilt fund in India?<\/strong><\/strong> <p class=\"schema-faq-answer\">SBI Magnum Gilt Fund is one of the oldest and well-known gilt funds in India.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1775651990608\"><strong class=\"schema-faq-question\"><strong>How long should I invest in gilt funds?<\/strong><\/strong> <p class=\"schema-faq-answer\">A minimum investment horizon of 3\u20135 years is generally recommended to manage interest rate fluctuations.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1775652000022\"><strong class=\"schema-faq-question\"><strong>What is the rate of return on gilt funds?<\/strong><\/strong> <p class=\"schema-faq-answer\">The rate of return on gilt funds is not fixed and depends on interest rate movements, typically offering moderate returns over time.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1775652010791\"><strong class=\"schema-faq-question\"><strong>Do gilts pay interest on maturity?<\/strong><\/strong> <p class=\"schema-faq-answer\">Yes, government securities pay interest, but in gilt funds, returns are reflected through changes in NAV rather than direct payouts.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1775652022208\"><strong class=\"schema-faq-question\"><strong>Is a gilt fund safe?<\/strong><\/strong> <p class=\"schema-faq-answer\">Gilt funds are safe from default risk but can experience fluctuations due to changes in interest rates.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1775652034112\"><strong class=\"schema-faq-question\"><strong>Why buy gilt funds?<\/strong><\/strong> <p class=\"schema-faq-answer\">Gilt funds are suitable for investors seeking government-backed investments with no credit risk and potential for market-linked returns.<\/p> <\/div> <\/div>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Source:<\/strong> AMFI<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#d79b30\" class=\"has-inline-color\">Disclaimer<\/mark>: This content is for education and awareness purposes only and should not be considered investment advice or a recommendation. Investments in securities markets are subject to market risks. Read all the related documents carefully before investing.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Looking for a relatively safe investment option, but unsure where to go beyond fixed deposits? Gilt funds are often considered low-risk mutual funds because they invest in government-backed securities. But, while they offer high safety from default risk, their returns are not fixed and can fluctuate with interest rates. This makes them very different from &hellip; <a href=\"https:\/\/shoonya.com\/blog\/gilt-funds\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;What Are Gilt Funds and How Do They Work?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":17,"featured_media":16995,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","_members_access_role":[],"_members_access_error":""},"categories":[12],"tags":[9638,9636,9637,9639,9641,2203,9640,2202,9642],"class_list":["post-16993","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mutual-funds","tag-gilt-bonds","tag-gilt-fund","tag-gilt-fund-meaning","tag-gilt-fund-returns","tag-gilt-fund-taxation","tag-gilt-funds","tag-gilt-funds-are-invested-in","tag-gilt-mutual-funds","tag-what-are-gilt-funds"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.4 - 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