Ask Value Research

Are Gilt Funds Safe?

K. Srinivas wants to know if gilt funds are safe investments & is the principal protected in them

I want to know whether investments in Gilt funds are safe. Is the principal protected? What are the indicative returns from Gilt funds?
- K. Srinivas

Gilt funds invest only in government bonds, so they don't face the risk of default on their investments. But they go down in value if interest rates go up and they also appreciate more when interest rates go down. Hence, your principal in gilt fund is not protected from losses. There are no indicative returns for Gilt funds.

This article was originally published on January 21, 2009.

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