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Overview
10-Year Constant Maturity Gilt Funds are government-security debt schemes designed to maintain exposure around a 10-year portfolio duration.
This makes the category considerably more duration-sensitive than many short and medium-term debt funds.
The portfolio is primarily invested in government securities, but sovereign credit quality does not remove interest-rate risk.
Explained
A 10-Year Constant Maturity Gilt Fund is an open-ended debt scheme investing predominantly in government securities while maintaining a constant 10-year portfolio duration according to the applicable category requirements.
The defining feature is not simply holding one bond that matures exactly 10 years from today.
Instead, the overall portfolio is managed so its duration stays around the prescribed 10-year level.
Explained
The fund manager buys and sells government securities to maintain the required portfolio duration.
As bonds move closer to maturity, their remaining duration declines.
The fund must therefore rebalance over time to keep the portfolio aligned with the 10-year requirement.
When government bond yields decline, a long-duration gilt portfolio can experience meaningful capital appreciation.
If yields rise, the same duration can cause meaningful price declines.
The fund's return therefore depends not only on coupon income but also on movements in government bond yields.
Suitability
These funds may suit investors who:
They are generally unsuitable for investors who believe all government-bond investments have stable prices.
Advantages
Investors know that the portfolio is managed around a 10-year duration. This is different from a regular Gilt Fund, where portfolio duration can vary.
The portfolio primarily consists of government securities, limiting exposure to conventional corporate default risk.
When government bond yields decline, long-duration bond prices can rise substantially. This can contribute meaningfully to returns.
The strategy makes its broad interest-rate sensitivity clearer than a flexible duration fund.
The manager handles portfolio rebalancing required to maintain the prescribed duration.
Before you invest
This is the most important factor. A relatively small increase in market yields can lead to a meaningful NAV decline.
Higher duration can amplify gains when yields fall and losses when yields rise. It is a risk characteristic, not a guarantee of superior returns.
Investors accustomed to Liquid or Short Duration Funds may be surprised by the price movements of a 10-year gilt strategy.
Trying to enter and exit solely based on predictions about policy-rate decisions can be difficult. Government bond yields reflect many factors beyond one policy rate.
Higher inflation expectations can push bond yields upward, potentially hurting long-duration bond prices.
Government borrowing, liquidity, global bond yields, inflation expectations, and monetary policy can all influence domestic government-security yields.
Taxation
These funds predominantly invest in debt securities.
Where the relevant Section 50AA provisions apply, gains on relevant units acquired on or after April 1, 2023 can be deemed short-term capital gains irrespective of actual holding period.
They are generally taxable at the investor's applicable rate, subject to prevailing law.
Investors should verify current tax rules before investing or redeeming.
Step by step
Good to know
It is an open-ended debt scheme investing predominantly in government securities while maintaining portfolio duration around the category's 10-year requirement.
Not necessarily. The portfolio can contain different eligible government securities, but the overall duration must meet the category requirement.
No. Corporate default risk is limited, but interest-rate risk can be substantial.
Government bond prices can fall, and a long-duration portfolio may experience a meaningful decline in NAV.
A regular Gilt Fund invests in government securities across maturities. A 10-Year Constant Maturity Gilt Fund maintains a defined long-duration profile.
Yes. Rising yields can result in capital losses even though the underlying securities are government bonds.
Recap
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FUND
I
ICICI Prudential 10 Year Constant Maturity Gilt Fund Direct GrowthDebt Gilt 10 year₹26.47
0.38%
4.03%
7.18%
5.75%
Bandhan 10 year Constant Maturity Gilt Fund - Dir - GrowthDebt Gilt 10 year₹48.99
0.37%4.35%
7.53%
5.73%
SBI 10 year Constant Maturity Gilt Fund Direct Reinvestment Inc Dist cum Cap WdrlDebt Gilt 10 year₹22.41
0.38%3.24%
6.84%
5.65%
DSP 10 year Constant Maturity Gilt Fund Direct GrowthDebt Gilt 10 year₹22.9
0.35%1.89%
6.18%
4.87%
UTI 10 year Constant Maturity Gilt Fund Direct GrowthDebt Gilt 10 year₹13.28
0.38%3.22%
6.82%
N.A.
J
JioBlackRock Nifty 8-13 yr G-Sec Index Fund Direct GrowthDebt Gilt 10 year₹10.34
0.34%2.77%
N.A.
N.A.
Bandhan 10 year Constant Maturity Gilt Fund - Dir Prdic Pyt of Inc Dis cum cptl Wdrl optDebt Gilt 10 year₹14.59
0.37%4.35%
7.53%
5.73%
SBI 10 year Constant Maturity Gilt Fund Direct GrowthDebt Gilt 10 year₹68.89
0.38%3.24%
6.84%
5.65%
I
ICICI Prudential 10 Year Constant Maturity Gilt Fund Direct Plan Qt Rinvm of Inc Dist cum Cap WdrlDebt Gilt 10 year₹11.54
0.38%1.83%
6.34%
5.21%
Bandhan 10 year Constant Maturity Gilt Fund - Dir Qt Pyt of Inc Dis cum cptl Wdrl optDebt Gilt 10 year₹11.82
0.37%1.24%
6.33%
4.99%
Bandhan 10 year Constant Maturity Gilt Fund - Dir Mn Pyt of Inc Dis cum cptl Wdrl optDebt Gilt 10 year₹10.36
0.37%0.41%
6.08%
4.86%
Bandhan 10 year Constant Maturity Gilt Fund - Dir Wkly Rnvmt of Inc Dis cum cptl WdrloptDebt Gilt 10 year₹17.69
0.37%
-0.19%
5.69%
4.67%
DSP 10 year Constant Maturity Gilt Fund Direct Payout of Income Dist cum Cap WdrlDebt Gilt 10 year₹10.74
0.35%1.89%
5.72%
4.6%
UTI 10 year Constant Maturity Gilt Fund Direct Annually Reinvestment Inc Dist cum Cap WdrlDebt Gilt 10 year₹11.58
0.38%0.59%
4.28%
N.A.
UTI 10 year Constant Maturity Gilt Fund Direct Annually Payout Inc Dist cum Cap WdrlDebt Gilt 10 year₹11.58
0.38%0.59%
4.28%
N.A.
UTI 10 year Constant Maturity Gilt Fund Direct Half Yearly Payout Inc Dist cum Cap WdrlDebt Gilt 10 year₹13.15
0.38%3.69%
N.A.
N.A.
UTI 10 year Constant Maturity Gilt Fund Direct Half Yearly Reinvestment Inc Dist cum Cap WdrlDebt Gilt 10 year₹13.15
0.38%3.69%
N.A.
N.A.
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