The Indian stock market is now experiencing its record peaks as the Nifty is hanging around 15,800, which is causing discomfort among equity investors. As a result, it would be better for investors to switch from equity investments to debt. Investing in gilt funds, which predominantly invest in government securities, can be a safe and secure way to start a SIP in the debt category. The reason for which we picked gilt funds for you is that, in the present low-interest-rate scenario, these vehicles can provide significant returns for investors who have a low-risk appetite, and also these funds have no exit load. Here are the top-rated and best-performing gilt funds that might be a smart choice for you to begin SIP in 2021.
DSP Government Securities Fund Direct Plan Growth
DSP Government Securities Direct Plan-Growth is a Gilt mutual fund plan offered by DSP Mutual Fund. This fund was established in January 2013 and has been in operation for the last 8 years. The fund's expense ratio is 0.55 percent, which is comparable to that of most other funds in the same category. According to Value Research, DSP Government Securities Direct Plan-Growth returns for the previous year are 3.96 percent, and from its inception, it has generated 8.86 percent average annual returns.
The top holdings of the fund are in GOI Sec. The fund's debt sector allocation includes both sovereign and non-sovereign debt. The fund currently has Rs 462 Cr in assets under management (AUM), and the latest NAV as of July 23, 2021 is Rs 77.81. There is no exit load charged by this fund, and you can start investing in it with as little as Rs 500 through SIP mode.
Axis Gilt Fund Direct Plan Growth
Axis Gilt Fund Direct Plan-Growth is a Gilt mutual fund scheme launched by the fund house Axis Mutual Fund. This fund has been in effect for eight years, having been established in January 2013. The fund's expense ratio is 0.4 percent, which is lower than the expense ratios of most other funds in the same category. According to Value Research, Axis Gilt Fund Direct Plan-Growth returns for the last year are 4.37 percent, and it has generated 8.16 percent average annual returns since its inception.
The fund's top holdings are the Government of India, the Reserve Bank of India, Haryana State, and Gujarat State. The debt sector allocation of the fund includes sovereign, financial, and other sectors. The fund presently has Rs 153 Cr in assets under management (AUM), and the latest NAV is Rs 20.92 as of July 23, 2021. This fund has no exit load, and you can start investing in this fund with a minimum monthly contribution of Rs 1000 through SIP.
IDFC Government Securities Investment Plan Direct Growth
IDFC Government Securities Investment Plan Direct-Growth is a Gilt mutual fund scheme launched by the fund house IDFC Mutual Fund. This fund has been in operation for eight years, having been established in January 2013. The expense ratio of the fund is 0.61 percent, which is comparable to that of most other funds in the same category. IDFC Government Securities Investment Plan Direct-Growth returns for the previous year were 3.39 percent, according to Value Research, and it has generated 9.95 percent average annual returns since its debut.
The majority of the fund's holdings are in GOI securities. The fund's debt is spread throughout sovereign and non-sovereign sectors. The fund currently has Rs 1,969 Cr in assets under management (AUM), and the latest NAV as of July 23, 2021 is Rs 29.61. One can start SIP in this fund by Rs 1000 and the fund has no exit load.
Best Gilt Funds To Invest In 2021
Here are the best gilt funds in 2021 based on ratings and past returns.
|Funds||1 Year Returns||3 Year Returns||5 Year Returns||Rating by Value Research||Rating by Morningstar|
|DSP Government Securities Fund Direct Plan Growth||3.96%||11.32%||9.19%||5 Star||5 Star|
|Axis Gilt Fund Direct Plan Growth||4.37%||10.78%||8.15%||5 Star||4 Star|
|IDFC Government Securities Investment Plan Direct Growth||3.39%||11.88%||9.58%||4 Star||5 Star|
Should you invest?
Among the debt category, investors who want to start investing as a substitute to fixed deposits of banks in the current low-interest-rate regime can consider starting SIP in gilt funds. In the last 1 to 5 years, these funds have beaten interest rates of bank fixed deposits by a huge percentage. Across the last 1-year gilt funds have given higher returns up to 6.54%. Whereas the average SIP return of the last 3 years is 9.48% and the average 5-year SIP return is 7.86%, according to Value Research.
Bank FDs are currently not providing attractive returns as most of the banks are now offering low-interest rates of around 5.5% which is undoubtedly near to the inflation rate as of now. As a result, investing in gilt funds may give you inflation-beating returns in the long term. These funds have no risk when compared to that of corporate bond funds as they invest in government securities but the matter of concern or risk involved in gilt funds is interest rate risk. As a suggestion, you must keep a close track of interest rate fluctuations and must stay invested for at least 5 years through SIP mode to get higher risk-adjusted returns than fixed deposits of banks.
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