Gilt with 10-year constant duration debt mutual funds are a type of mutual fund that primarily invests in government securities (gilts) with a constant duration of around 10 years. These funds aim to provide investors with exposure to long-term government bonds while maintaining a consistent duration profile to manage interest rate risk. The constant duration approach helps ensure that the fund's sensitivity to interest rate changes remains relatively stable over time, providing investors with a predictable risk-return profile.
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AUM ₹1673 Cr •
Expense 0.31%
AUM ₹2387 Cr •
Expense 0.23%
AUM ₹340 Cr •
Expense 0.3%
AUM ₹55 Cr •
Expense 0.31%
AUM ₹165 Cr •
Expense 0.24%
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Gilt with 10-year constant duration debt mutual funds work by pooling money from investors and investing it primarily in government securities with a fixed duration of around 10 years. The fund manager selects gilts that closely match the target duration and actively manages the portfolio to maintain a consistent duration profile. As interest rates change, the prices of the underlying government securities fluctuate, impacting the NAV of the mutual fund. The fund earns income from interest payments on the gilts, which is passed on to investors in the form of dividends or reinvested to increase the fund's NAV. Investors can buy and sell shares of the mutual fund at its NAV, which is calculated based on the value of the fund's underlying assets.
Predictable Duration
Gilt with 10-year constant duration debt mutual funds offer a predictable duration profile, as the fund's duration remains relatively stable around 10 years. This helps investors manage interest rate risk and provides greater certainty about the fund's sensitivity to changes in interest rates.
Government Securities
These funds primarily invest in government securities (gilts), which are considered to have low credit risk as they are backed by the government. Investing in gilts provides investors with a high level of safety and security for their capital.
Stable Returns
Gilt with 10-year constant duration debt mutual funds aim to provide stable returns over the long term, driven by interest income from government securities. The predictable duration profile helps investors anticipate the fund's performance under different interest rate scenarios.
Portfolio Diversification
Investing in Gilt with 10-year constant duration debt mutual funds can help diversify a portfolio by adding exposure to government securities with longer maturities. This diversification can reduce overall portfolio risk and enhance risk-adjusted returns.
Liquidity
Government securities held by these mutual funds are highly liquid, allowing investors to buy and sell shares of the mutual fund easily on any business day. This liquidity provides investors with flexibility and access to their investments when needed.
Interest Rate Risk
Gilt with 10-year constant duration debt mutual funds are sensitive to changes in interest rates. When interest rates rise, bond prices typically fall, leading to potential losses for investors. Conversely, when interest rates decline, bond prices rise, resulting in capital appreciation for investors.
Inflation Risk
These funds are exposed to inflation risk, as inflation erodes the purchasing power of future interest payments and principal repayment. If inflation rises faster than expected, the real returns from government securities may be lower than anticipated, impacting the fund's performance.
Market Volatility
Gilt with 10-year constant duration debt mutual funds can experience price fluctuations due to changes in interest rates, market sentiment, and economic conditions. While government securities are considered relatively safe, they are not immune to market volatility, which can affect the fund's NAV.
Limited Return Potential
Government securities typically offer lower yields compared to corporate bonds or equities. As a result, Gilt with 10-year constant duration debt mutual funds may have limited return potential compared to other fixed-income or equity investments, especially during periods of low-interest rates.
Gilt with 10-year constant duration debt mutual funds are suitable for investors seeking a combination of stability, income, and moderate growth potential within their investment portfolio. Investors who may benefit from investing in these funds include
Conservative Investors
Investors with a low risk tolerance who prioritize capital preservation and steady income over higher returns may find Gilt with 10-year constant duration debt mutual funds appealing.
Income Seekers
Investors looking for a reliable source of income may consider investing in these funds, as they offer regular interest payments from government securities.
Portfolio Diversifiers
Investors looking to diversify their portfolio and reduce overall risk may allocate a portion of their assets to Gilt with 10-year constant duration debt mutual funds to balance out exposure to more volatile asset classes like equities.
By considering these points before investing in Gilt with 10-year constant duration debt mutual funds, you can make informed decisions and potentially enhance the risk-adjusted returns of your investment portfolio.
Investment Objectives
Determine whether investing in Gilt with 10-year constant duration debt mutual funds aligns with your investment objectives, risk tolerance, and income needs. Consider whether you seek stability, income, or portfolio diversification through exposure to government securities with a fixed duration.
Interest Rate Outlook
Assess the current interest rate environment and outlook for future interest rate movements. Consider how changes in interest rates may impact the performance of Gilt with 10-year constant duration debt mutual funds and whether you are comfortable with the associated interest rate risk.
Credit Quality
While government securities are considered low risk, evaluate the credit quality of the underlying securities held by the mutual fund. Understand the credit ratings of the gilts in the portfolio and assess the fund's exposure to sovereign credit risk.
Expense Ratios and Fees
Review the expense ratios and fees associated with investing in Gilt with 10-year constant duration debt mutual funds. Compare these costs with other similar funds and consider how they may impact your investment returns over time.
Investment Horizon
Determine your investment horizon and liquidity needs before investing in Gilt with 10-year constant duration debt mutual funds. These funds are suitable for investors with a long-term investment horizon who can withstand fluctuations in interest rates and market volatility.
Now that you have understood what is Gilt with 10 year Constant Duration mutual fund, you need to know how easily you can start your investment with INDmoney. Just follow these simple steps given below, to start your mutual fund investment journey with us.
Step 1
Download the INDmoney app and create your free investment account by completing your KYC ( Know Your Customer).
Step 2
Once your Free investment account is ready, you can either search for a Gilt with 10 year Constant Duration Mutual Fund or go to the mutual fund section and tap on Gilt with 10 year Constant Duration mutual funds.
Step 3
Choose a Gilt with 10 year Constant Duration Mutual Fund by looking at aspects like past returns, volatility, downside capture ratio, AUM, Expense ratios and underlying stocks and sectors.
Step 4
Step 5
Choose the amount that you want to invest as SIP or LumpSum.
Step 6
Set up payments. If you choose to set up SIP in Gilt with 10 year Constant Duration mutual funds, you can do a free automatic pay set up via bank mandate or UPI. If you choose to invest in lumpsum (one-time) then you can pay via UPI, netbanking, NEFT or RTGS.
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