Best Long Term Gilt Funds

Long-term Gilt Funds are debt mutual fund schemes that primarily invest in government securities (gilts) with extended maturities, typically above ten years. These funds are ideal for investors seeking stable returns over a long-term horizon while prioritising low credit risk, as they are backed by the government's sovereign guarantee. By focusing on long-term gilts, these funds offer a predictable investment option suitable for achieving financial goals like retirement planning, children's education, or wealth preservation.

You would have got

Total Investment

₹ 1200

Expected Returns

₹ 23

Total Value

₹ 1223

Past performance doesn’t assure future results; actual outcome may vary due to market dynamics.

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Understanding Long-Term Gilt Funds

How Do Long-Term Gilt Funds Work?

Long-term gilt funds pool money from investors to invest primarily in government securities with long-term maturities, often exceeding ten years. These funds are mandated to allocate at least 80% of their portfolio to government bonds, which are considered one of the safest investment options due to the sovereign guarantee.

Fund managers closely monitor interest rate trends, inflation data, and economic conditions to manage these funds effectively. The value of long-term gilts is directly influenced by interest rate movements: bond prices rise when interest rates fall, and vice versa. This interest rate sensitivity can result in significant gains in a declining rate environment, making long-term gilt funds an attractive option for investors with a long horizon.

Long-Term Gilt Funds FAQs

Long-term gilt mutual funds are debt funds that invest primarily in government securities with extended maturities, typically exceeding seven years. They are considered low-risk due to their sovereign backing.

These funds are suitable for risk-averse investors seeking steady returns, those with a long-term investment horizon, and individuals looking to diversify their portfolios with low-credit-risk instruments.

To maximise returns and reduce the impact of interest rate volatility, it is recommended to stay invested for at least five years.

Long-term gilt funds are highly sensitive to interest rate changes. Falling interest rates increase bond prices, leading to potential capital gains, while rising rates can cause temporary losses.

These funds offer low credit risk, potential for capital appreciation in declining interest rate scenarios, portfolio diversification, and stable returns over the long term.

While gilt funds carry negligible credit risk, they are subject to interest rate risk, meaning the value of the fund can fluctuate based on changes in interest rates.

Earnings are exempt from income tax if the investment is held for at least five years. Short-term holdings are taxed as per the investor's income tax slab.

Yes, most long-term gilt funds allow Systematic Investment Plans (SIPs) to enable disciplined and gradual investments over time.

Yes, gilt funds offer liquidity, but early withdrawals may result in lower returns and, in some cases, an exit load. Short-term earnings are also subject to higher tax rates.

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