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10 Year Gilt Funds
3 Year Average Returns
6.94%
Funds on Dhan
5
Gilt Funds 10 Year Constant Duration are a type of debt funds that invest in government securities with a maturity of 10 years. These Funds have a fixed duration and are sensitive to interest rate movements. While these are the best 10 Year Gilt Funds to invest in, you must know these 3 things before you start investing.
- Goal: 10 Year Gilt Funds focus on government securities with a constant maturity of 10 years, aiming for stable long-term investments.
- Investment Horizon: Best for investors with a long-term outlook, ready to stay invested for around 10 years, navigating through interest rate cycles.
- Risk: They are exposed to interest rate risk; when rates rise, bond prices fall, and vice versa.
Best 10 Year Gilt Funds to Invest in 2026
Note: 3Y & 5Y returns are annualised. Rest everything is absolute.
Scheme | AUM (in Cr.) | Fund Age | 1W | 1M | 3M | 6M | 1Y | 3Y  | 5Y |
|---|---|---|---|---|---|---|---|---|---|
Compare | ₹ 282 | 13 Yrs | 0.14% | 1.26% | -0.91% | 2.81% | 3.75% | 7.61% | 5.88% |
Compare | ₹ 1,848 | 12 Yrs | 0.13% | 1.18% | -1.18% | 2.50% | 3.13% | 7.21% | 5.81% |
Compare | ₹ 1,451 | 13 Yrs | 0.24% | 1.16% | -1.20% | 2.33% | 2.38% | 6.86% | 5.64% |
Compare | ₹ 102 | 4 Yrs | 0.16% | 1.06% | -1.19% | 2.19% | 2.32% | 6.83% | 0.00% |
Compare | ₹ 41 | 12 Yrs | 0.09% | 1.13% | -1.30% | 1.90% | 1.17% | 6.18% | 5.00% |
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Disclaimer: Mutual fund investments carry market risks; read all scheme-related documents carefully. Past performance does not guarantee future returns.
About Gilt Funds 10 Year Constant Duration Funds
Gilt Funds with a 10 Year Constant Duration are specialized investment vehicles that primarily focus on government securities, maintaining a portfolio duration of around 10 years. This unique approach offers a specific way to engage with debt instruments. Understanding these funds involves recognizing their structure and market behavior:
- Investment Focus: These funds invest in government securities, which typically carry lower credit risk due to government backing.
- Duration Strategy: The constant duration of around 10 years means the fund maintains an average maturity of its holdings close to this time frame.
- Interest Rate Sensitivity: Due to their long duration, these funds are highly sensitive to interest rate movements, which can significantly impact their performance.
Investing in Gilt Funds with a 10 Year Constant Duration has its unique set of advantages, particularly under certain market conditions:
- Credit Safety: The primary advantage lies in their investment in government securities, which are considered safe in terms of credit risk.
- Portfolio Diversification: They can add diversification to your investment portfolio, especially if it's heavily weighted in other asset classes such as equity.
- Predictability in Duration Management: The constant duration strategy provides a predictable approach to managing interest rate risk.
- Better Return and Tax Benefits: These funds can offer better returns than fixed deposits, and are also tax-efficient as they qualify for long-term capital gains tax with indexation.
The suitability of investing in Gilt Funds with a 10 Year Constant Duration depends on your financial objectives, understanding of market dynamics, particularly interest rates, and investment horizon. These funds invest in government securities with a constant maturity of around 10 years, making them sensitive to interest rate fluctuations. Here are some factors to consider:
- Interest Rate Environment: With any increase or decrease in interest rate, the performance of these funds can experience changes that may not suit your overall investment strategy.
- Investment Horizon: If your investment horizon aligns with the long-term nature of these funds, they might fit into your portfolio.
- Risk Tolerance: You should be comfortable with the interest rate risk and the potential for price volatility associated with a constant long-duration fund.
Gilt Funds with a 10 Year Constant Duration may be suitable for certain investor profiles:
- Investors with Long-term Horizons: Suitable for those who have a long-term investment horizon and can ride out the volatility due to interest rate fluctuations.
- Market-Savvy Investors: If you have a good understanding of the bond market and interest rate movements, these funds can be a part of your investment strategy.
- Diversification Seekers: Investors looking to diversify their portfolio with government securities might consider these funds.
- Investors with Moderate Risk Appetite: If you're willing to accept moderate risk, especially related to interest rate movements, these funds might align with your investment profile.
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FAQs
Gilt Funds with a 10-Year Constant Duration invest in government securities with the aim of maintaining a constant portfolio duration of around 10 years. This strategy aims to provide stable returns by investing in government bonds, benefiting from interest income and price appreciation, especially in a falling interest rate environment.
These funds are typically invested in long-term government securities, including central and state government bonds, with a maturity profile aimed at maintaining a constant duration of 10 years. This focus on government bonds minimizes credit risk, as these are sovereign securities.
Gilt Funds with a 10-Year Constant Duration can give profit through interest income and potential capital gains from the trading of government securities. Their performance is influenced by changes in interest rates; they tend to do well when interest rates fall, leading to higher bond prices and vice versa.
To answer your question, the returns from Gilt Funds with a 10-Year Constant Duration are not exempt from taxation. They are subject to taxes depending on the holding term, just as other returns from debt funds will be.
For investments held for less than three years, profits are taxed as short-term capital gains, according to your income tax slab. For investments held for more than three years, profits are taxed as long-term capital gains at 20% with indexation benefits, which adjust the purchase cost for inflation.
When choosing the best Gilt Fund with a 10-Year Constant Duration, consider factors like past performance in various interest rate scenarios, the fund manager's expertise, and the expense ratio. It's also crucial to align the fund's interest rate outlook with your own, as these funds can be sensitive to changes in interest rates.
No, it's not necessary to open a demat account for investing in these funds. You can invest directly through Mutual Funds AMC or through various online investment platforms that allow you to buy and sell units without needing a demat account. This makes the investment process straightforward and accessible.
The choice between lump-sum investments and SIP (Systematic Investment Plan) depends on your investment goals and market outlook. A lump-sum investment might be preferable in a declining interest rate environment to lock in higher yields. In contrast, SIPs can help average the cost of investment over time, reducing the impact of interest rate volatility on your investment.
To start an 10 Year Gilt Fund SIP online, follow these 4 steps:
- Open Demat Account
- Choose the 10 Year Gilt Fund you wish to invest in.
- Choose the SIP option, specifying the amount and SIP date
- Set up an auto-pay via bank account to automate the SIP payments
Yes, you can redeem your investment in Gilt Funds with a 10-Year Constant Duration at any time. However, due to the specific interest rate risk associated with their constant duration strategy, the optimal time for selling can significantly impact your returns, especially in a changing interest rate environment.
No, there is no lock-in period for Gilt Funds with a 10-Year Constant Duration, offering flexibility in terms of liquidity. You are free to enter and exit the investment as per your financial goals and market perspective, albeit keeping in mind the potential impact of interest rate movements on fund performance.
The primary risk associated with these funds is interest rate risk. As the fund maintains a constant duration, its NAV (Net Asset Value) is sensitive to changes in interest rates. A rise in interest rates can lead to a decrease in bond prices, affecting the fund's performance. However, credit risk is minimal since the investments are in government securities.
While Gilt Funds with a 10-Year Constant Duration invest in government securities, making them relatively safe in terms of credit risk, they are not 100% safe. They are subject to interest rate risk, meaning the fund's value can fluctuate based on changes in interest rates. However, the government backing does provide a higher level of security compared to corporate bonds or equities.
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