K Gilt Serial 2003 is a special class within the category of gilt funds, which invests in instruments due for maturity in or before 2003. While entry is at NAV, exit with in 30-calendar days faces a load of 0.15%.
K Gilt Serial Plan 2003 is gilt fund. Gilt funds with their commitment to invest only in government securities are like sectoral funds in the debt category. Government securities with their sovereign backing carry minimal credit risk. Also, with their extremely high liquidity, they offer high trading profits.
Interest rate sensitivity is the other important component of bond performance. As interest rates move down, bonds gain value and vice versa. With the liquidity of the gilt instruments adding to this sensitivity, it calls for active management to curtail this risk. Serial Plans however, commit their investments to a single maturity and hence offer little room for active management. The only way investors can avoid this price risk by holding fund till maturity.
As the name suggests, K Gilt Serial 2003 has chosen to commit its investments to government instruments maturing only in year 2003. This dedication to a single maturity offers no room for active management and hence the fund is likely to be volatile if that particular maturity is out of market favour. However, since K Gilt serial 2003 is a lower maturity plan, it is relatively less impacted by change in interest rates.
With a return since launch of 13.12%, K Gilt Serial 2003 has emerged as a well performing fund. However, considering that it is not insulated from price risk, investors short not align with the fund as a short-term parking lot. Instead consider this fund if your are clear that the fund's maturity in December 2003 matches with your cash requirement.