Gilt Fund with 10 year Constant duration

Best Gilt Fund with 10 year Constant duration

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What is Gilt Fund with 10-Year Constant Duration?

Gilt funds have now become a popular mutual fund, and investors with varied years of investment experience are choosing these funds over other mutual funds. Gilt funds earn their returns from investing the money in different securities owned by the Reserve Bank of India. View More

The Reserve of India floats different securities in the market to generate wealth and fund other projects designed for the country and the nation’s welfare.

The Reserve Bank of India was formulated to take care of the banking system in India. However, they transformed into the legislative and executive bodies of the banking system. The RBI also controls the other factors that affect the economy, like inflation, the money circulating in the Indian market, etc. Also, the Reserve Bank of India is like a central bank, as the central and different state banks reach out to the RBI for loans and other financial help.

When the Government reaches out to the RBI for any help, the RBI issues some securities in the market that gives the investors an avenue to earn interest. These securities come with a fixed duration. Once the securities mature, you receive your original investment and interest income. A Gilt Fund with 10-Year Constant Duration is a mutual fund that invests in these government securities to earn a return. These are long-term investments, and you must research them to understand the subject’s nuances. You should try to know everything about the gilt fun before you decide to invest.

Who Should Invest in Gilt Fund with 10-Year Constant Duration?

Gilt Fund with 10-Year Constant Duration is a popular category among investors across categories. These funds do not come with a high risk as the Government manages these funds, and they try to provide their promised returns to all their investors. View More

However, you don’t get to decide the duration of holding the fund as the period of these funds is fixed by the Reserve Bank of India. These investments are an ideal option for the following:

  • Investors who are looking for moderate-risk and a steady return on their investments
  • Investors looking for secure Government funds that are managed directly by the Government and the other bodies managed directly or indirectly by the Government
  • Investors who are interested in investing only for a fixed duration
  • Investors who are ready to commit to the fund for ten years and wait for it to yield returns.

Features of Gilt Fund with 10-Year Constant Duration

A Gilt Fund with 10-Year Constant Duration has several features that make it unique and attractive for investors. Some of these unique features of the fund include: View More

Fixed Term: Unlike other mutual funds where you have the liberty to hold the fund for as long as you want, Gilt Fund with 10-Year Constant Duration comes with a fixed duration of 10 years. Post the maturity date; you will receive the principal amount and the interest you have earned on the fund. Therefore, you should invest in these funds only if you have the patience to wait for ten years for a decent return.

Government Securities: The special thing about a Gilt Fund with a 10-Year Constant Duration is that it earns all its returns by investing in Government securities. All these securities have a fixed duration of 10 years and are directly managed by the Government or any other body that represents the Government. The Government cushions the investments and ensures that the investors get a steady return in the future.

Taxability of Gilt Fund with 10-Year Constant Duration

Understanding the taxability of the Gilt Fund with 10-Year Constant Duration is very important if you are trying to invest in these mutual funds. The major holdings of the fund consist of Government bonds, and hence, they are taxed accordingly. View More

The taxes applicable on a Gilt Fund with a 10-Year Constant Duration are like those levied on the debt funds in India. If you hold the mutual fund for less than three years, you will have to pay a short-term capital gains tax on the returns you earn from these Gilt Funds. The rate of tax depends on your income slab.

However, if you choose to hold the Gilt fund for more than three years, you must pay a 20% long-term capital gains tax. The rate comes with an indexation benefit using which you can adjust the purchase price of the gilt fund and balance the effect of inflation. All dividends you earn from a Gilt Fund with a 10-Year Constant Duration become a part of your taxable income.

Risk Involved with Gilt Fund with 10-Year Constant Duration.

Let’s try to understand some risks when investing in a Gilt Fund with a 10-Year Constant Duration.

  • The risks that come with a 10-year constant duration Gilt fund are much lower than those with a fixed medium or low duration.

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  • The changes in the market might not impact the fund. However, interest rate fluctuations can impact the performance of the funds. If the rate of interest rises, the bond’s price will fall, reducing the value of the bond.
  • Negative returns are a common problem as the fund’s performance is quite impacted by the sharp increase in interest.

Therefore, before investing in a Gilt Fund with a 10-Year Constant Duration, you must understand the factors that can lead to an increase or a decrease in the interest rates.

Advantages of Gilt Fund with 10-Year Constant Duration

There are several advantages of a Gilt Fund with a 10-Year Constant Duration. Let’s understand some of these advantages to better invest in these funds. View More

Safe Investments: A Gilt Fund with 10-Year Constant Duration is one of the safest investment options. The Government of India issues the mutual fund along with the Reserve bank of India. The Government takes its commitment quite seriously and ensures all the interest payments are made in time to the investors. As the Government guarantees the payment of the principal along with interest, they are considered safe and secure investments.

Low Risks: Several investors invest a huge amount in a Gilt Fund with a 10-Year Constant Duration. The risk does not increase with the increase in the amount of investment. Hence, if you are interested in adding a debt fund to your portfolio, you can easily go for a Gilt Fund with a fixed duration of 10 years. These investments are subject to interest rates. However, the interest rates depend on the existing rates decided by the Reserve Bank of India.

Long Duration: When you invest in a Gilt Fund with a 10-Year Constant Duration, you block investment for 10 years. Therefore, these investments are ideal for investors looking for steady returns over a long period. Also, the holding duration will help you understand the kind of cyclical changes the interest goes through every period.

Who are These Funds Suited For?

The Gilt Funds with 10-Year Constant Duration are managed directly by the Government and the Reserve Bank of India. Hence, people who are looking at the credibility of the asset management company more than the returns of the company. View More

Also, some investors might not be satisfied with the rate at which a government fund grows. Hence, they might not be open to investing in a government-funded fund.

These funds are suitable for people who have:

  • Long-term investment goals: As the name suggests, the Gilt Fund with 10-Year Constant Duration has a lock-in period of 10 years. Therefore, if you are looking for a long-term investment that provides steady returns in the long run, you must invest in these funds.
  • Moderate-risk-taking ability: A Gilt Fund with a 10-Year Constant Duration does not depend on the changes in the market. Hence, it is not subject to market risks. However, they are still considered moderately risky because the fund’s value changes with the fluctuation in the interest rates.
  • Want to Diversify: A Gilt Fund with 10-Year Constant Duration is a debt fund. Hence, if most of your portfolio consists of equity and equity-linked instruments, you can mitigate the risks by investing in a Gilt fund.

Apart from the aspects discussed in detail above, there are several other things that you must check before investing in a Gilt Fund with a 10-Year Constant Duration in 2022. Some of these things include:

  • Expense Ratio: Every mutual fund comes with an expense ratio. The expense ratio shows the ratio of the fund value that the investor needs to pay to the asset management company or the fund managers. Generally, the amount is used in the day-to-day operations of the business.
  • Investment objective: You must analyze and chalk down your investment objectives to ensure that you are on the right track. You must put your money in the Gilt Fund with a 10-Year Constant Duration to earn ten-year stable returns. However, if you are unsure about your objectives, you should avoid putting your money at stake.
  • Interest rate: Before you invest in a Gilt Fund with a 10-Year Constant Duration, you should check the current interest rate to understand the kind of interest you will receive. You should also check the historical patterns to understand why the interest rates keep fluctuating.

Popular Gilt Fund with 10 year Constant duration

  • Fund Name
  • Min SIP Investment Amt
  • AUM (Cr.)
  • 3Y Return

ICICI Pru Constant Maturity Gilt Fund-Dir Growth is an Gilt Fund with 10 year Constant duration scheme that was launched on 12-09-14 and is currently under the management of our experienced fund manager Rahul Goswami. With an impressive AUM of ₹2,195 Crores, this scheme's latest NAV is ₹21.3353 as of 18-08-23.

ICICI Pru Constant Maturity Gilt Fund-Dir Growth scheme has delivered a return performance of 6.9% in the last 1 year, 4.2% in the last 3 years, and an 8.8% since its launch. With a minimum SIP investment of just ₹5,000, this scheme offers a great investment opportunity for those looking to invest in Gilt Fund with 10 year Constant duration funds.

  • Min SIP Investment Amt
  • ₹5,000
  • AUM (Cr.)
  • ₹2,195
  • 3Y Return
  • 6.9%

ICICI Pru Gilt Fund – Direct Growth is an Gilt scheme that was launched on 02-01-13 and is currently under the management of our experienced fund manager Rahul Goswami. With an impressive AUM of ₹4,000 Crores, this scheme's latest NAV is ₹94.3462 as of 18-08-23.

ICICI Pru Gilt Fund – Direct Growth scheme has delivered a return performance of 9.1% in the last 1 year, 5.8% in the last 3 years, and an 8.7% since its launch. With a minimum SIP investment of just ₹5,000, this scheme offers a great investment opportunity for those looking to invest in Gilt funds.

  • Min SIP Investment Amt
  • ₹5,000
  • AUM (Cr.)
  • ₹4,000
  • 3Y Return
  • 9.1%

ICICI Pru Constant Maturity Gilt Fund-Dir Growth is an Gilt Fund with 10 year Constant duration scheme that was launched on 12-09-14 and is currently under the management of our experienced fund manager Rahul Goswami. With an impressive AUM of ₹2,195 Crores, this scheme's latest NAV is ₹21.3353 as of 18-08-23.

ICICI Pru Constant Maturity Gilt Fund-Dir Growth scheme has delivered a return performance of 6.9% in the last 1 year, 4.2% in the last 3 years, and an 8.8% since its launch. With a minimum SIP investment of just ₹5,000, this scheme offers a great investment opportunity for those looking to invest in Gilt Fund with 10 year Constant duration funds.

  • Min SIP Investment Amt
  • ₹5,000
  • AUM (Cr.)
  • ₹2,195
  • 3Y Return
  • 6.9%

AXIS Gilt Fund – Direct Growth is an Gilt scheme that was launched on 01-01-13 and is currently under the management of our experienced fund manager Devang Shah. With an impressive AUM of ₹216 Crores, this scheme's latest NAV is ₹22.967 as of 18-08-23.

AXIS Gilt Fund – Direct Growth scheme has delivered a return performance of 6% in the last 1 year, 4.7% in the last 3 years, and an 7.5% since its launch. With a minimum SIP investment of just ₹5,000, this scheme offers a great investment opportunity for those looking to invest in Gilt funds.

  • Min SIP Investment Amt
  • ₹5,000
  • AUM (Cr.)
  • ₹216
  • 3Y Return
  • 6%

Kotak Gilt Invest – PF & Trust Plan – Direct Growth is an Gilt scheme that was launched on 01-01-13 and is currently under the management of our experienced fund manager Abhishek Bisen. With an impressive AUM of ₹2,387 Crores, this scheme's latest NAV is ₹95.6455 as of 18-08-23.

Kotak Gilt Invest – PF & Trust Plan – Direct Growth scheme has delivered a return performance of 8.1% in the last 1 year, 5.3% in the last 3 years, and an 8.4% since its launch. With a minimum SIP investment of just ₹100, this scheme offers a great investment opportunity for those looking to invest in Gilt funds.

  • Min SIP Investment Amt
  • ₹100
  • AUM (Cr.)
  • ₹2,387
  • 3Y Return
  • 8.1%

HDFC Gilt Fund – Direct Growth is an Gilt scheme that was launched on 01-01-13 and is currently under the management of our experienced fund manager Anil Bamboli. With an impressive AUM of ₹2,038 Crores, this scheme's latest NAV is ₹49.7679 as of 18-08-23.

HDFC Gilt Fund – Direct Growth scheme has delivered a return performance of 6.5% in the last 1 year, 4.2% in the last 3 years, and an 7.5% since its launch. With a minimum SIP investment of just ₹100, this scheme offers a great investment opportunity for those looking to invest in Gilt funds.

  • Min SIP Investment Amt
  • ₹100
  • AUM (Cr.)
  • ₹2,038
  • 3Y Return
  • 6.5%

Frequently Asked Questions

What risks are associated with a Gilt Fund with a 10-Year Constant Duration? 

A Gilt Fund with a 10-Year Constant Duration is not impacted by any market or credit risks. This is because the Government and the Reserve Bank of India manage the fund directly; hence, they know how to ensure maximum returns even when the market is not performing that well.

However, these funds are subject to interest rate risk. When the interest rate rises, the fund’s asset value goes down. Therefore, you must keep a NAV of the fund before investing in it.

Can I invest in a Gilt Fund with 10-Year Constant Duration during recession? 

Yes, you can invest in a Gilt Fund during the recession. This is because the Government wants more people to invest during a recession and inject money into the system. Also, the Government tries to improve aggregate demand for the product by taking necessary fiscal and monetary stimulus.

What are Gilt Funds with 10-year constant duration?

Gilt Funds with 10-Year Constant Duration are open-ended debt schemes. The SEBI has mandated these funds to make 80% of their investments in Government bonds and other securities whose Macaulay duration is 10 years.

These funds come with an interest rate, and you earn an interest income based on this. The fund’s interest rate is decided based on the existing repo rate that the Reserve Bank of India decides.

Are there any limitations of a Gilt Fund with 10-Year Constant Duration? 

Unlike other funds, this is a debt-based fund. Hence, the returns generated from these funds are pretty low compared to equity-based mutual funds. Also, as Government wants a larger section of the society to benefit from a Gilt Fund with 10-Year Constant Duration. Therefore, the fund managers of a Gilt Fund with a 10-Year Constant Duration fixes a very conservative approach in deciding the basics of the fund.

What kind of taxes are available on the Gilt Fund with 10-Year Constant Duration?

As the fund is held with the investor for 10 years, a long-term capital tax is applicable on all your interests earned from a Gilt Fund with 10-Year Constant Duration. Post adjusting for indexation, a long-term capital gains tax of 20% will be charged on all the interest income you earn in the company. 

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