Long-term gilts funds invest in long-dated government Bonds with maturities greater than five years up to even 30 years. In Gilt Funds, the higher the maturity of G-Secs, the higher is the vulnerability to an interest rate change. Well, in such case, long-term gilt funds respond actively to interest rate changes than short-term gilt funds. The times where interest rates are expected to come down, long term gilt funds have the capability to deliver good returns.
Mostly, it is advisable to invest in long term bond funds when interest rates are expected to ease down because a decrease in interest rates causes a rise in the prices of long-term securities. Investors who are comfortable with fluctuating interest rates in the market, should only prefer Investing in long term Debt fund. For better results, it is advisable to invest in these top rated long-term gilt funds.
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Fund NAV Net Assets (Cr) 3 MO (%) 6 MO (%) 1 YR (%) 3 YR (%) 2017 (%) Debt Yield (YTM) Mod. Duration Eff. Maturity Exit Load SBI Magnum Constant Maturity Fund Growth ₹39.6381
₹343 4.3 5.1 8.8 9.2 9.9 7.59% 6Y 6M 9Y 7M 20D NIL IDFC Government Securities Fund - Constant Maturity Plan Growth ₹27.6529
₹22 5.4 7.5 10.7 8.9 11.8 7.91% 6Y 3M 18D 9Y 1M 24D NIL DSP BlackRock 10Y G-Sec Fund Growth ₹14.0797
₹19 4.1 4.9 5.2 7.4 5.9 7.57% 6Y 2M 8D 8Y 10M 10D 0-7 Days (0.1%),7 Days and above(NIL) Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 17 Jan 19
Fincash has employed the following parameters for shortlisting the top performing funds:
Past Returns: Return analysis of last 3 years.
Parameters & Weights: Information ratio with some modifications for our ratings and rankings.
Qualitative & Quantitative Analysis: Quantitative measures like Average Maturity, Credit Quality, Expense Ratio, Sharpe Ratio, Sortino Ratio, Alpa, including fund age and the size of the fund has been considered. Qualitative analysis like the reputation of the fund along with the fund manager is one of the important parameters that you would see in the listed funds.
Asset Size: The minimum AUM criteria for debt Mutual Funds are INR 100 Crores with some exceptions at times for new funds that are doing well in the market.
Performance with Respect to Benchmark: Peer average.
Some of the important tips to consider while investing in long term gilt funds are:
Investment Tenure: Investors planning to invest in long term gilt funds should stay invested for minimum three to five years.
Invest via a SIP: SIP or Systematic Investment plan is the most efficient way to invest in a Mutual Fund. They not only provide a systematic way of investing, but also ensures regular investment growth. You can invest in a SIP with an amount as low as INR 500.
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