This Mutual Fund Invests In Government Bonds, Given Upto 136% Returns: Top Rated By Morningstar

Mutual funds and SIPs are investment tools, that are now preferred by a large number of Indian because of the higher return opportunities than the traditional assured income options. Here, the portfolio of a gilt fund, which investments mostly in government bonds, has been discussed. This gilt fund was top-rated by a reputed rating agency, Morningstar.

Gilt Mutual Fund SIP investment rationale

Gilt funds are also termed debt funds that mostly invest in government securities or bonds. The reason these kinds of funds are called gilt funds is gilded edge-certificates, the government bonds were used to be. According to the SEBI rules, gilt funds will have to invest at least 80% of the total asset in government securities or bonds. These funds have zero default risk, but investors might face a high-interest rate risk. Gilt funds are generally long-term funds, so, the change in interest rate by the central bank and the government will impact your returns.

Additionally, you must look out for the AUM, and an expense ratio of the mutual fund, to understand your profitability quotient.

Nippon India Gilt Securities Fund- Growth

Nippon India Gilt Securities Fund is a mutual fund SIP investment that has a NAV of Rs. 30.93, additionally the fund size (AUM) is Rs. 1317.83 crore. The Expense Ratio (ER) of this fund is 1.56%. However, this fund's ER is a bit higher than the category average, which is 1.30%. This can impact your profitability marginally.

The Expense Ratio is measured as the percentage, which the fund house will utilize from the retail investors' money, for fund management purposes. The fund size or AUM is considered as the total market value of the mutual fund's assets.

This above-mentioned mutual fund SIP has been best rated with 5 Star by rating agency Morningstar.

Absolute and annualized returns

As it is a government bond-based fund, the Nippon India Gilt Securities Fund's SIP's absolute returns have been most lucrative in the long term. In the last 1-year SIP return stood at 1.35%, in the last 2 years it has fetched 3.18% returns, in the last 3 years it has given 8.17% returns, in the last 5 years, it has fetched 19.20% returns, and in the last 10 years, it has given 54.38% returns. Annualized returns of this fund's SIP were 6.94% in the past 5 years, and 8.40% in the past 3 years.

Nippon India Gilt Securities Fund's absolute mutual fund returns are highest in 5 years terms. In the last 1 year return stood at 3.97%, in the last 2 years it has fetched 10.11% returns, in the last 3 years it has given 26.93% returns, in the last 5 years it has given 43.68% returns, and in the last 10 years, it has given 136.89% returns. In the past 3 years, the Nippon India Gilt Securities Fund's annualized returns stood at 9.00%, outperforming the category average at 8.13%.

Portfolio

Nippon India Gilt Securities Fund has a total of 31 Debt Holdings, and its Modified Duration is 5.45 years. It has 84.70% in debt holdings, and it has 15.30% in other funds. Nippon India Gilt Securities Fund has 84.70% in government securities, 22.64% in TREPS, 0.06% in Margin.

Other funds under this category are, IDFC Government Securities Fund - Investment Plan - Regular Plan, DSP Government Securities Fund - Regular Plan, SBI Magnum Gilt Fund - Regular Plan, etc.

(Also read: This Mid-cap Mutual Fund Ticked Above 82% Returns In Long Term: Rated By Morningstar)

Disclaimer

Investing in equities/mutual funds/SIPs/debts poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, and the author are not liable for any losses caused as a result of decisions based on the article. (Data mentioned as on February 22, 2022)