Should I invest my spare money in gilt funds?

I am 25 years old. I want to invest my spare money in debt mutual funds. I already have a lot of equity exposure. I don't need this money for another 7 to 10 years. Can I invest in a gilt fund?
-Sharan Mehta

Tarun Birani, Founder and CEO, TBNG Capital Advisors, responds:

Gilt mutual funds invest in government securities (G-Sec) with medium and long term maturity. Data for the last 10 years shows that gilt funds have been very volatile. These mutual funds are very sensitive to interest rate changes and can yield double-digit negative returns. However, they also have the potential to offer double-digit positive returns.

We don’t recommend investments in gilt funds, particularly as a category, as they are volatile and we believe that any investor investing in a debt fund has a conservative risk appetite. The one-year returns and even long-term performances look good for gilt funds. For retail investors seeking to invest now, where we already had a series of rate cuts, these funds doesn’t look that promising.