Gilt mutual funds or schemes that invest in government securities aren't as rigorously followed by investors as some of the other debt categories. In the last three years, many gilt funds have delivered healthy double-digit returns, according to data from Valueresearch. Given that these are issued by the Sovereign, there is nil credit risk, although there may be some interest rate risk. Here are the top five gilt mutual funds.
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IDFC Government Securities Fund is the chart topper over the past three years. It has delivered 11.5 percent returns over this period. It holds government securities maturing during various years, in its portfolio. The holdings are quite concentrated. It has assets to the tune of Rs 1,937 crore and charges an carries an expense ratio of 1.23 percent.
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DSP Government Securities fund is the next in the list, with 11.1 percent returns over the past three years. The fund manages Rs 432 crore in assets and charges an expense ratio of 1.05 percent. The portfolio is relatively diffused compare to the IDFC fund.
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The third in the order of top performers is Edelweiss Government Securities fund, with returns of 11.06 percent in three years. It manages a relatively small Rs 99 crore in assets and levies an expense ratio of 1.32 percent. Due to its smaller size, the fund manages a concentrated portfolio.
Axis Gilt fund delivered 10.5 percent over the past three years. In addition to government securities, the fund invests in RBI's treasury bills and state government loans as well. It manages Rs 147 crore in assets. The expense ratio is 1 percent.
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SBI Magnum Gilt fund has delivered 10.5 percent returns in the last three years. It is the largest in the category with assets of Rs 3,620 crore. The expense ratio is 0.95 percent. The portfolio is fairly diversified with investments in g-secs, RBI's treasury bills and state government loans.
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These funds are not our recommendations. Gilt funds can be a small part of your overall debt portfolio. Corporate bond, Banking & PSU Debt and short-term funds can be considered first. As indicated earlier, gilt funds do carry interest rate risk. Consult your advisor before investing. Or, go through Moneycontrol's MC30 to pick your debt funds.
