In 2026, India’s bond and interest rate environment has become crucial for investors. Fluctuations in interest rates are being observed due to efforts to control inflation and the policies of the Reserve Bank of India (RBI). In such a scenario, many investors are turning to government-backed mutual funds, where credit risk is virtually non-existent. Gilt mutual funds are considered useful for investors who seek stable returns with a safe option and want to maintain a balanced portfolio. This article will help you understand gilt fund returns, the risks associated with them, and suitable gilt funds for 2026.
Gilt mutual funds are included in the debt mutual fund categories defined by SEBI (Securities and Exchange Board of India). The primary objective of these funds is to invest investors’ money in government bonds to minimize credit risk.
Best Gilt Mutual Funds to invest in India
SBI Gilt Fund
ICICI Prudential Gilt Fund
HDFC Gilt Fund
Nippon India Gilt Fund
Baroda BNP Paribas Gilt Fund
Tata Gilt Securities Fund
Axis Gilt Fund
UTI Gilt Fund
Quant Gilt Fund
PGIM India Gilt Fund
Best Gilt Mutual Funds – An Overview
1. SBI Gilt Fund
The SBI Gilt Fund is managed by SBI Mutual Fund, which was established on February 7, 1992. This fund invests exclusively in government bonds and exhibits stability due to its large size. The portfolio has a significant allocation to government securities maturing between 2032 and 2055, such as bonds maturing in 2040 and 2035, giving it long-duration exposure. The fund is managed by Sudhir Agarwal.
Fund Details :
Details
Information
Current NAV
70.07
Fund Size
11,033.35
Expense Ratio
0.95%
Minimum Investment
₹5,000
Minimum SIP
₹500
Exit Load
Nil
Lock-in Period
Not Applicable
Fund Manager
Sudhir Agarwal
Fund Performance
Metric
Value
3-year return
7.33
5-year return
6.09
Alpha
-0.07%
Beta
1.05
Sharpe Ratio
0.05
Risk
6.83%
2. ICICI Prudential Gilt Fund
ICICI Prudential Gilt Fund is a pure government bond-based mutual fund managed by ICICI Prudential AMC, which was launched in 1993. This fund invests its money exclusively in bonds issued by the central and state governments, thus eliminating the risk of credit default. Its portfolio includes long-term G-Secs maturing between 2055 and 2065, along with some State Development Loans, which allows the fund to perform well during periods of falling interest rates.
Fund Details :
Details
Information
Current NAV
112.83
Fund Size
92,15.50
Expense Ratio
1.10%
Minimum Investment
₹5,000
Minimum SIP
₹1,000
Exit Load
Nil
Lock-in Period
Not Applicable
Fund Manager
Manish Banthia
Fund Performance
Metric
Value
3-year return
8.21
5-year return
6.69
Category Average (3Y)
6.34%
Alpha
0.02%
Beta
0.62
Sharpe Ratio
0.16
Risk
7.65%
3. HDFC Gilt Fund
The HDFC Gilt Fund is managed by HDFC Mutual Fund and was launched on December 10, 1999. This fund invests exclusively in bonds issued by the central government and has been active in the gilt segment for a long time. Its portfolio includes government bonds maturing between 2031 and 2065, making it suitable for medium- to long-term investors. Fund manager Anil Bamboli manages the duration of the portfolio keeping the prevailing interest rate environment in mind.
Fund Details :
Details
Information
Current NAV
58.57
Fund Size
2,938.91
Expense Ratio
0.89%
Minimum Investment
₹100
Minimum SIP
₹100
Exit Load
Nil
Lock-in Period
Not Applicable
Fund Manager
Anil Bamboli
Fund Performance
Metric
Value
3-year return
7.22
5-year return
5.35
Alpha
-0.07%
Beta
0.91
Sharpe Ratio
0.04
Risk
6.77%
4 . Nippon India Gilt Fund
The Nippon India Gilt Fund is managed by Nippon India Mutual Fund, which was established on February 24, 1995. This fund invests exclusively in bonds issued by the central and state governments. The portfolio has a significant allocation to long-term G-Secs maturing between 2039 and 2064, along with some State Development Loans (SDLs) and net current assets to maintain liquidity. The fund is managed by Pranay Sinha, who focuses on balancing duration and risk.
Fund Details :
Details
Information
Current NAV
42.92
Fund Size
1,862.21
Expense Ratio
1.28%
Minimum Investment
₹5,000
Minimum SIP
₹100
Exit Load
0.25% up to 7 days; Nil thereafter
Lock-in Period
Not Applicable
Fund Manager
Pranay Sinha
Fund Performance
Metric
Value
3-year return
7.04
5-year return
5.44
Alpha
-0.13%
Beta
1.09
Sharpe Ratio
-0.01
Risk
6.20%
5. Baroda BNP Paribas Gilt Fund
The Baroda BNP Paribas Gilt Fund is managed by Baroda BNP Paribas Mutual Fund and was launched on November 4, 2003. This fund invests exclusively in government bonds and its portfolio has a significant allocation to G-Secs maturing between 2035 and 2065. The fund focuses on stable duration management to mitigate the impact of interest rate fluctuations. It is managed by Gurvinder Singh Vasan.
Fund Details :
Details
Information
Current NAV
46.96
Fund Size
1,326.61
Expense Ratio
0.45%
Minimum Investment
₹5,000
Minimum SIP
₹500
Exit Load
Nil
Lock-in Period
Not Applicable
Fund Manager
Gurvinder Singh Wasan
Fund Performance
Metric
Value
3-year return
7.58
5-year return
5.55
Alpha
-0.04%
Beta
1.02
Sharpe Ratio
0.10
Risk
7.23%
6. Tata Gilt Securities Fund
The Tata Gilt Securities Fund is managed by Tata Mutual Fund and was launched on March 15, 1994. This fund focuses entirely on government bonds and invests in bonds issued by the central government as well as some state governments. The portfolio includes long-term G-Secs maturing between 2033 and 2074, making the fund sensitive to changes in interest rates. Additionally, liquidity is maintained through holdings in Repo Instruments. The fund is managed by Akhil Mittal.
Fund Details :
Details
Information
Current NAV
87.57
Fund Size
1,288.11
Expense Ratio
1.37%
Minimum Investment
₹5,000
Minimum SIP
₹150
Exit Load
Nil
Lock-in Period
Not Applicable
Fund Manager
Akhil Mittal
Fund Performance
Metric
Value
3-year return
7.62
5-year return
5.59
Alpha
-0.12%
Beta
1.12
Sharpe Ratio
0.01
Risk
6.53%
7. Axis Gilt Fund
The Axis Gilt Fund is managed by Axis Mutual Fund and was launched on January 13, 2009. This fund invests exclusively in central government bonds, thus eliminating credit risk. Its portfolio has a significant allocation to long-term government bonds maturing between 2034 and 2065, making the fund sensitive to interest rate fluctuations. The fund is managed by Devang Shah, who focuses on maintaining a balanced duration in the portfolio.
Fund Details :
Details
Information
Current NAV
27.38
Fund Size
599.23
Expense Ratio
0.82%
Minimum Investment
₹5,000
Minimum SIP
₹1,000
Exit Load
Nil
Lock-in Period
Not Applicable
Fund Manager
Devang Shah
Fund Performance
Metric
Value
3-year return
7.62
5-year return
5.82
Alpha
-0.08%
Beta
0.96
Sharpe Ratio
0.07
Risk
7.17%
7. UTI Gilt Fund
The UTI Gilt Fund is managed by UTI Mutual Fund and was established on November 14, 2002. This fund is entirely focused on government bonds and holds a significant portion of G-Secs (Government Securities) maturing between 2031 and 2053 in its portfolio. A portion of the fund is also invested in State Development Loans and net current assets to maintain liquidity. The fund is managed by Pankaj Pathak, who focuses on stable duration and risk control.
Fund Details :
Details
Information
Current NAV
65.58
Fund Size
560.78
Expense Ratio
0.93%
Minimum Investment
₹500
Minimum SIP
₹500
Exit Load
Nil
Lock-in Period
Not Applicable
Fund Manager
Pankaj Pathak
Fund Performance
Metric
Value
3-year return
7.06
5-year return
5.44
Alpha
-0.07%
Beta
0.96
Sharpe Ratio
0.05
Risk
6.78%
8. Quant Gilt Fund
The Quant Gilt Fund is managed by Quant Mutual Fund, which was established on December 1, 1995. This fund invests exclusively in government bonds and some State Development Loans (SDLs). Its portfolio is spread across government bonds maturing between 2030 and 2064, while also maintaining liquidity and diversification through TREPS and SDLs. The fund is managed by Sanjeev Sharma, who actively manages the duration based on the changing interest rate environment.
Fund Details :
Details
Information
Current NAV
12.17
Fund Size
111.73
Expense Ratio
1.41%
Minimum Investment
₹5,000
Minimum SIP
₹1,000
Exit Load
Nil
Lock-in Period
Not Applicable
Fund Manager
Sanjeev Sharma
Fund Performance
Metric
Value
3-year return
6.73
5-year return
–
Alpha
-0.15%
Beta
1.06
Sharpe Ratio
-0.09
Risk
5.76%
10. PGIM India Gilt Fund
The PGIM India Gilt Fund is managed by PGIM India Mutual Fund, which was established on September 24, 2008. This fund invests exclusively in government bonds, and its portfolio has a significant allocation to G-Secs maturing between 2034 and 2055. Liquidity is maintained by holding a portion of the assets in net current assets. The fund is managed by Puneet Pal, whose focus is on duration control and risk management.
Impact of Interest Rate Changes : Gilt funds are directly linked to government bonds, so changes in interest rates affect their Net Asset Value (NAV). When interest rates rise, the value of existing bonds decreases, and the fund’s value may fall.
Short-Term Return Risk : If you invest in gilt funds for a very short period, the returns can be uncertain, especially if the direction of interest rates changes suddenly.
Market Liquidity Conditions : Government bonds are generally easy to buy and sell, but liquidity can decrease somewhat during periods of market stress.
Inflation-Related Risk : If the returns from a gilt fund are lower than the inflation rate, the investor’s real earnings are affected. This is why they are not considered entirely risk-free.
Conclusion
Gilt mutual funds can be suitable for investors seeking relatively safe investments through government bonds and who understand the fluctuations in interest rates. Choosing the right gilt fund requires considering the investment horizon, risk tolerance, and the prevailing interest rate environment. In the long run, these funds can help stabilize a portfolio, but investing without understanding the risks is not advisable.
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