Indiabulls Mutual Fund launches Gilt fund, open ended debt scheme to invest in government securities

Indiabulls Mutual Fund has launched Indiabulls Gilt fund, an open ended debt scheme that invests in government securities. The objective of the scheme is to generate income and capital appreciation by investing predominantly in sovereign securities issued by the Central Government and by State Governments.

When interest rates fall down, government bonds move up. Hence in a falling interest rates scenario, there is a possibility of a capital appreciation. Also government bonds carry little default risk, thus reducing overall risk. As per Value Research, in the last one year ended January 2, medium and long term gilt funds as a category has given 10.35% returns.



""Interest rates are expected to fall by 100 basis points in the next one year. Gilt funds can benefit from falling interest rates and one can expect a 10 to 11% return from such funds over the next one year,"" says Anup Bhaiya, MD and CEO, Money Honey Financial Services.

The fund offers growth and dividend option. You need minimum Rs 5000 to invest in this fund. There is an exit load of 0.25% if you redeem before 30 days from the date of allotment of units. The new fund offer closes on January 11.

Why invest: A gilt fund gives you the advantage of falling interest rates without taking credit risk.

Why not invest: There are other gilt funds which have a long term track record.