How Gilt fund works
Government securities carry very low domestic default risk, but their market prices can move sharply when interest rates change, especially at long duration. Gilt therefore does not mean stable NAV.
An example
A gilt portfolio with modified duration of seven may fall roughly 7% for a one-point yield rise as an approximation, before convexity and other changes.
Why it matters for your family
Families should match duration with horizon and capacity for interim loss. Sovereign credit quality does not remove interest-rate or reinvestment risk.
Questions people ask
- What does Gilt fund mean?
- A gilt fund is a debt mutual-fund category that invests predominantly in government securities under its mandate.
- Why does Gilt fund matter for a family?
- Families should match duration with horizon and capacity for interim loss. Sovereign credit quality does not remove interest-rate or reinvestment risk.
- Where can I verify information about Gilt fund?
- Start with SEBI Investor, linked on this page, and the current official document for the product or tax year involved.