Gilt mutual funds invest predominantly in government securities. Under the category definition, these open-ended debt schemes must invest at least 80% of their total assets in government securities, across maturities.
Since these funds hold sovereign debt, their returns are influenced largely by changes in government bond yields and interest rates.
According to the latest AMFI data, there are 23 gilt funds in the category. Their performance has varied across different investment periods, with some schemes leading over one year while a different set of funds feature among the top performers over five years.
Which gilt funds led in 1-year returns?
Bandhan Gilt Fund topped the category with a 7.74% one-year return. It was followed by UTI Gilt Fund at 5.39% and Franklin India Gilt Fund at 5.33%.
| Gilt funds | 1-year return |
| Bandhan Gilt Fund | 7.74% |
| UTI Gilt Fund | 5.39% |
| Franklin India Gilt Fund | 5.33% |
| Axis Gilt Fund | 4.51% |
| ICICI Prudential Gilt Fund | 4.45% |
*Source: Value Research, Direct plans, Returns as on 18 September 2026
The gap between the top-performing scheme and the rest of the category is notable. Bandhan Gilt’s one-year return was more than two percentage points higher than the second-ranked UTI Gilt.
Which schemes led in 5-year returns?
The ranking changes when the investment period is extended to five years. ICICI Prudential Gilt Fund led with a 6.42% annualised return, followed by Bandhan Gilt at 6.38%.
| Gilt funds | 5-year return |
| ICICI Prudential Gilt Fund | 6.42% |
| Bandhan Gilt Fund | 6.38% |
| SBI Gilt Fund | 6.20% |
| DSP Gilt Fund | 5.99% |
| Axis Gilt Fund | 5.96% |
*Source: Value Research, Direct plans, Returns as on 18 September 202
Only two gilt funds—Bandhan Gilt Fund and Axis Gilt Fund—feature among the top five on both the 1-year and 5-year return charts.
This also shows why investors looking at gilt funds should distinguish between short-term and longer-term performance.
Which gilt funds are at the bottom?
At the lower end of the one-year return chart, Union Gilt Fund delivered 1.39%, the lowest among the 23 gilt funds. LIC MF Gilt Fund delivered 4.94%, placing it among the lower-returning schemes over the five-year period.
However, none of the 23 gilt funds posted a negative return in 1- and 5-year periods.
For investors, it is important to remember that gilt funds primarily invest in government securities, so their returns are closely linked to movements in bond yields.
When yields fall, government bond prices generally rise, which can support gilt fund NAVs. Conversely, rising yields can weigh on bond prices and fund returns. This means gilt funds may see periods of volatility even though they invest in government securities.
Disclaimer: This is purely for educational/informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.
