Best Gilt Funds – Meaning, Benefits & Returns

What are Gilt Funds?

Gilt funds are open-ended debt funds, which primarily invest in Government Securities (G-Secs) across maturities. The term G-Secs include government bonds issued by central and state governments, Treasury Bills (T-Bills) and Cash Management Bills (CMBs). As per the SEBI circular on categorisation of mutual fund schemes, Gilt Funds have to invest at least 80% of their total assets in G-Secs.

List of Top 10 Gilt Funds

Fund Name	Returns (% p.a.)
	1 year	3 year	5 year	10 year
ICICI Prudential Gilt Fund	6.29	7.58	6.02	7.92
Baroda BNP Paribas Gilt Fund	4.87	7.25	5.03	6.46
Axis Gilt Fund	4.30	7.13	5.26	7.11
Bandhan Gilt Fund	3.29	7.00	4.90	7.51
SBI Magnum Gilt Fund	4.08	6.98	5.58	7.73
UTI Gilt Fund	4.79	6.89	5.13	7.30
HDFC Gilt Fund	4.34	6.79	4.87	6.61
DSP Gilt Fund	2.74	6.74	5.17	7.49
Invesco India Gilt Fund	2.83	6.52	4.49	6.33
Tata Gilt Securities Fund	3.39	6.50	4.47	6.24

Data as on December 9, 2025

Why Invest in Gilt Funds?

• The risk of default in government securities is almost nil as these are backed by the sovereign guarantee, which makes the portfolios of Gilt Funds immune from credit risk
• Some Gilt Funds may also invest in corporate bonds backed/guaranteed by the central government or respective state governments, which offer higher returns than G-Secs
• Gilt Funds usually try to enhance their returns by actively managing interest rate risks
• Gilt funds usually follow flexible duration strategy to benefit across interest rate cycles and are free to invest anywhere across the sovereign yield curve

Who Should Invest in Gilt Funds?

• Investors seeking exclusive exposure to government securities across maturities
• Those seeking to invest in debt funds without any credit risk exposure
• Investors seeking accrual income from government securities along with the possibility to benefit from capital gains caused by falling interest rates
• Investors who clearly understand the potential and risks involved in pursuing duration risk strategies