What are they?
Gilt funds are a specific type of debt mutual fund that invests primarily in government securities.
Government securities (G-Secs)
These are debt instruments issued by the government to finance its operations and raise revenue. They represent an IOU from the government to the investor, promising to repay the principal amount and pay interest.
Low risk
G-Secs are considered low-risk investments because the government is unlikely to default on its debt. This makes gilt funds a popular choice for conservative investors seeking stable returns.
Open-ended
Gilt funds are open-ended, meaning you can invest in them and redeem them at any time.
Returns
Gilt funds generate returns primarily through interest payments on the government securities they hold. They can also generate capital gains if the price of the government securities increases due to factors like interest rate changes