Best Gilt Mutual Funds in India 2026: Top 10 & Guide
What Gilt mutual funds are, who should invest, key risks, and the top 10 funds with returns and risk data.
Gilt mutual funds invest only in government securities, which removes credit risk but leaves interest rate and duration risk. They suit investors with a medium to long-term horizon. This guide covers who should invest, benefits, risks, and the top 10 gilt funds from our data.
Key takeaways
- Gilt funds invest in government securities issued by the central or state governments, known as gilts.
- They carry minimal credit risk, but interest rate and duration risk remain.
- They suit a horizon of at least 3 to 5 years.
- Longer-duration gilt funds carry the highest duration risk.
- The top 10 funds below are ranked by an internal score, with return and risk numbers shown.
What are gilt mutual funds?
Gilt funds are debt funds that invest in government securities. A government security is a debt instrument issued by the central or state government to raise money for public expenses; these are issued through the Reserve Bank of India and are called gilts.
Who should invest in gilt mutual funds?
- Investors who want exposure to debt investments through mutual funds.
- Investors who want to avoid credit risk, since the holdings are government securities.
- Investors close to retirement who want a reliable option under professional management.
- Investors who want to balance a portfolio of riskier funds.
What should you consider before investing?
- Costs: check the expense ratio, which can depend on the manager's strategy.
- Returns: there is no credit risk, but there is interest rate risk based on economic conditions.
- Horizon: these funds suit a horizon of at least 3 to 5 years, with an average holding of about three years.
- Taxes: capital gains are taxed according to the rules in force.
Advantages of gilt mutual funds
- Low credit risk, unlike funds that buy corporate bonds.
- Strong capital safety profile because of government-backed securities, though not a guarantee.
- Reasonable returns over a medium to long period.
- Two ways to invest: SIP or lump sum.
Risks of gilt mutual funds
- Interest rate risk: bond prices move inversely to interest rates, so a rise in rates lowers prices.
- Duration risk: gilt maturities range from about 90 days to more than 30 years. Longer-duration gilt funds carry higher duration risk, though holding a bond to maturity can reduce it.
How are Gilt mutual funds taxed?
Gains from Gilt funds are subject to tax on gains, with the rules depending on the type of debt fund and the date of purchase. The rates and holding-period rules depend on the fund type and can change, so check the current rules or speak to a tax advisor before you invest.
Top 10 Gilt mutual funds ranked by an internal score
These are the top 10 Gilt funds from our data, ranked by Invo Wealth's internal fund-quality score. The score itself is not shown, only the return and risk numbers behind it. A "--" means the fund has not completed that period or the data is unavailable. Some entries are different plan or option variants of the same scheme (for example Direct vs Regular, or Growth vs Bonus), so their figures can look similar.
Returns across 6 months to 5 years
Performance data as of 5 September 2026.
| Fund | 6M CAGR | 1Y CAGR | 3Y CAGR | 5Y CAGR |
|---|---|---|---|---|
| ICICI Prudential Gilt Fund | 4.77% | 4.45% | 6.73% | 6.11% |
| SBI GILT FUND - Regular Plan - Growth | 3.79% | 3.38% | 6.12% | 5.74% |
| SBI GILT FUND - Regular Plan - Growth | 3.79% | 3.36% | 6.11% | 5.74% |
| Axis Gilt Fund | 4.34% | 4.22% | 6.88% | 5.59% |
| SBI GILT FUND - Regular Plan - Growth | 3.79% | 3.36% | 6.11% | 5.74% |
| UTI - Gilt Fund - Regular Plan - Growth | 4.25% | 4.75% | 6.40% | 5.44% |
| UTI - Gilt Fund - Regular Plan - Discontinued PF Plan Growth | 4.25% | 4.75% | 6.40% | 5.44% |
| DSP Gilt Fund | 3.82% | 2.94% | 6.13% | 5.43% |
| Bandhan Gilt Fund | 9.89% | 7.10% | 7.32% | 5.72% |
| BARODA BNP PARIBAS GILT FUND | 3.00% | 3.04% | 6.30% | 5.22% |
Risk and consistency metrics
| Fund | ISIN | Volatility | Max drawdown (3Y) | Sortino ratio |
|---|---|---|---|---|
| ICICI Prudential Gilt Fund | INF109K01JR4 | 2.78% | -2.70% | -0.14 |
| SBI GILT FUND - Regular Plan - Growth | INF200K01AK5 | 3.20% | -3.35% | -0.39 |
| SBI GILT FUND - Regular Plan - Growth | INF200K01AH1 | 3.20% | -3.35% | -0.39 |
| Axis Gilt Fund | INF846K01AX8 | 3.60% | -3.06% | -0.05 |
| SBI GILT FUND - Regular Plan - Growth | INF200K01982 | 3.20% | -3.35% | -0.39 |
| UTI - Gilt Fund - Regular Plan - Growth | INF789F01661 | 3.15% | -3.30% | -0.27 |
| UTI - Gilt Fund - Regular Plan - Discontinued PF Plan Growth | INF789F01PT6 | 3.15% | -3.30% | -0.27 |
| DSP Gilt Fund | INF740K01615 | 4.51% | -4.69% | -0.27 |
| Bandhan Gilt Fund | INF194K01DZ2 | 4.30% | -4.23% | 0.11 |
| BARODA BNP PARIBAS GILT FUND | INF955L01450 | 3.08% | -2.64% | -0.32 |
Gilt funds can swing with interest rates, so volatility and drawdown tell you more than the latest return.
How to invest in Gilt mutual funds
You can invest in these funds using the Invo Wealth app. Sign up, get complete portfolio insights and start investing in mutual funds that actually suit you.
Conclusion
Gilt funds remove credit risk but not interest rate risk. They suit patient investors who understand how rate moves affect bond prices.
Frequently asked questions
What is a gilt fund?
A gilt fund is a debt fund that invests exclusively in bonds and fixed interest-bearing securities issued by the central and state governments.
What is the difference between a gilt fund and a debt fund?
Gilt funds are a type of debt fund that invests only in government-issued securities, while other debt funds can also hold corporate bonds and other instruments.
Are gilt funds better than fixed deposits?
Gilt funds are market-linked, so their returns are not assured. Whether they suit you depends on your goals and the interest rate outlook.
What is the difference between a gilt fund and a gold fund?
Gilt funds hold securities issued by the Indian government, while gold funds hold assets related to gold.
How can I invest in gilt mutual funds?
You can invest through a SIP or a lump sum. To invest in these funds, you can use the Invo Wealth app: sign up, get portfolio insights and start investing.
Mutual fund investments are subject to market risks; read all scheme-related documents carefully. This article is for education only and is not investment advice. Past performance does not guarantee future returns. Invo Wealth is an AMFI-registered mutual fund distributor (ARN-368528).