Gilt Fund — Mutual Fund Term Explained

A debt fund investing only in Government Securities. Zero credit risk since backed by the government, but significant interest rate risk.

Gilt funds invest only in Government Securities (G-Secs). Zero credit risk — the government cannot default on domestic currency debt. However, they carry the highest interest rate risk.

Best used when interest rates are expected to decline.

Related terms

• Debt Fund — A mutual fund investing in fixed income securities — bonds, G-Secs, commercial paper. Lower risk than equity but also lower returns.
• Modified Duration — For debt funds: the approximate % change in NAV for a 1% change in interest rates. Higher = more sensitive to rate changes = more interest rate risk.
• Interest Rate Risk — For debt funds: when interest rates rise, fund NAV falls. Funds with longer duration are most affected.

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