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K Gilt Investment

Taking the right call on maturity on interest rates, K Gilt Investment has posted a return of 14.19% since launch. With this the fund has emerged an above average performer

The first fund dedicated to investments in Gilts, K Gilt Investment has posted a return of 14.19% since launch. With this the fund has emerged an above average performer. The fund has paid six dividends aggregating to 21.04%, in its over two-year history.

Safety is what sets this fund apart. While debt markets offer a gamut of investment opportunities, this fund focuses on investment in Gilts and is akin to a sectoral fund in the bond market. Government securities or gilts are sovereign backed instruments and carry very low credit risk. Also, Gilts are the most traded instruments and hence offer the added advantage of liquidity.

This liquidity is however, is a double-edged sword. While it offers the flexibility to change tack, these instruments are also the most sensitive to interest rate changes. Bond prices move against interest rate - gaining value in times of a fall and shedding value in times of a rate hike. These movements are more pronounced in longer dated papers. While holding on to a diversified bundle of longer dated Gilts, the fund has actively switched across maturities, to minimise this interest rate risk. Even as the one year return looks good at 15.16% as the best and worst returns suggests these the fund is typically susceptible to volatility, like all Gilt funds.

Taking the right call on maturity on interest rates, K Gilt Investment has emerged an above average performer. By holding a longer-term investment focus, this volatility can be minimised.