Gilt with 10 Year Constant Duration Fund: Definition, Features, and Benefits

Gilt with 10 year constant duration fund can be defined as a type of Gilt Fund that primarily focuses on government securities or G-secs with a constant maturity of 10 years. It offers a unique blend of safety, liquidity, and potentially high long-term returns, making it suitable for various investor profiles. Let us have a closer look at its different aspects.

This means that Gilt with 10-year constant duration Funds are a type of debt mutual fund, so they are primarily invested in fixed-return government securities that have little to no credit risk. However, this comes at a cost as the long maturity means that these schemes have potentially high interest rate risk.

Below are the key features of Gilt with 10-year constant maturity funds:

•   ⦁ Key Portfolio Investments: This type of fund invests in government securities (G-secs) that have a constant maturity period of 10 years, aligning the portfolio's duration with this specific timeframe. So, these schemes will have a high Macaulay Duration.
•  ⦁ High Credit Quality:Since the fund primarily invests in G-Secs, these schemes carry a low level of credit risk compared to many other investment options, as these bonds have sovereign backing from the Indian government.
•   ⦁ Interest rate sensitivity: The constant duration of 10 years means that the fund's price sensitivity to interest rate changes is consistent and on the higher side due to the long-term maturity of the underlying investments.

Let us check out the reasons why investors should consider investing in Gilt Funds with 10 year constant duration:

Investing in gilt with 10 year constant duration fund is a strategic decision that can align with various financial goals. Here's a step-by-step guide to navigating the investment process: