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Despite high returns, avoid gilt funds if you are a small investor

Entry and exit need to be timed, which is difficult for small investors

Investment
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The returns from gilt funds could remain in double digits or higher than other debt fund categories if the rates fall

Tinesh Bhasin
Gilt and long-duration funds are giving double-digit returns as there are expectations that the Reserve Bank of India (RBI) will go for a rate cut in June. Gilts and longer-duration papers are highly sensitive to interest rate movements and the returns shoot up as rates fall.

The one-year average returns from gilt funds are at 10.18 per cent. In the same duration, the returns from the other gilt category — 10-year constant duration — are at 11.85 per cent. There is also the newly introduced long-duration debt category, which has given 11.53 per cent returns in the past year. The three

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First Published: May 29 2019 | 12:08 AM IST

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