What is Gilt Fund ?
5paisa Research Team
Last Updated: 28 Apr, 2025 06:04 PM IST

Content
- What is a Gilt Fund?
- Understanding How Gilt Mutual Funds Operate
- Types of Gilt Funds
- The Advantages of Investing in Gilt Funds
- Who Should Invest in a Gilt Fund?
- Factors to Consider as an Investor
- Risks of Investing in Gilt Funds
- Which Kind of Securities Does the Gilt Fund Invest In?
- How Are Gilt Funds Taxed? A Complete Guide
- What Should Be the Right Time for Investing?
- Conclusion
Nowadays, investors are constantly on the lookout for safe and stable investment options.
With stock markets fluctuating and credit risks becoming more visible in corporate bonds, many individuals and institutions are shifting their focus toward gilt funds. These funds, backed by government securities, have emerged as a reliable choice for conservative investors seeking capital preservation with moderate returns.
In India, where financial literacy is still catching up, gilt funds offer an excellent way for everyday investors to diversify their portfolios without exposing themselves to high credit risk. If you’ve been wondering what a gilt fund is, how it works, and whether it's the right fit for you to reach financial goals, this in-depth guide will answer all your questions in simple, understandable language.
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. For detailed disclaimer please Click here.
Frequently Asked Questions
The returns on investments made through gilt funds in government securities are not fixed. They are dependent on changes in the market and interest rates.
Yes, especially if you invest during an increased interest rate cycle and redeem in the short term. However, because the government backs the securities, there is very little chance that you will lose your principal in the default.
Most gilt funds have no exit load charges at all. However, some funds may have a small fee if you redeem your investment within a very short period. Always check the scheme related documents before investing.