Debt: Gilt

What is it?

Glit debt funds invest a minimum of 80% of total assets in the Government of India securities (G-secs) with different maturities.

Objective

These funds aim to offer steady returns to investors in line with the prevailing market interest rates by investing in government-issued securities.

Suitability and opinion

These funds are one of the safest investment options. These funds have virtually zero risk of default as they invest in bonds that are issued by the government. This makes them suitable for risk-averse investors looking to generate decent returns across different investment tenures. But these funds may have high volatility in response to changes in interest rates. We believe that investors can avoid this category altogether and can invest in liquid funds and short-duration funds for the debt allocation of their portfolios. We feel that there are too many debt fund categories available based on the tenure and types of bonds. This leads to more confusion and does not add any value to retail investors.