X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Gilt funds – Low risk, higher returns - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Jan 11, 2001

    Gilt funds – Low risk, higher returns

    Who says high risk always translates into higher returns? Or for that matter low risk investments will always give lower returns?

    Gilt funds invest in long-dated (more than 12 months) government paper (gilts). To that extent, gilt funds are credit risk free, but still have to deal with risk from interest rate volatility. Being at the lower end of the risk spectrum, returns from gilt funds are also low.

    Open-ended, Gilt Schemes NAV
    (Rs)
    Last
    week
    Last
    month
    Last
    year
    Since
    inception
    Cangilt 13.7 0.0% 0.0% 18.9% 34.3%
    JM G-Sec (PFP) (Gr) 12.3 1.1% 3.2% 17.6% 17.5%
    JM G-Sec (RP) (Gr) 12.1 1.1% 3.1% 16.5% 16.3%
    Templeton Govt Sec (Gr) 12.5 0.9% 2.9% 15.5% 15.5%
    DSP ML G-Sec. Fund A(Gr) 11.9 0.8% 2.5% 14.1% 14.6%
    Birla Gilt Plus (LT) (Gr) 11.8 0.8% 2.5% 13.4% 14.4%
    Pru ICICI Gilt(IP)(Gr) 12.0 0.8% 2.3% 13.4% 13.6%
    K Gilt Serial 2007 (Gr) 11.7 0.4% 1.8% 13.2% 14.0%
    K Gilt Investment (Gr) 12.7 0.8% 2.2% 12.2% 12.5%
    K Gilt Serial 2003 (Gr) 11.5 0.5% 1.4% 11.8% 12.3%
    Pru ICICI Gilt(TP)(Gr) 11.7 0.4% 1.1% 11.8% 11.8%
    Birla Gilt Plus Inv. (Gr) 11.5 0.8% 2.1% 11.5% 11.9%
    LIC Govt. Sec. (Gr) 11.3 0.4% 1.0% 11.5% 11.6%
    Cangilt PGS (Gr) 11.1 0.6% 1.5% 11.3% 11.3%
    Dundee Sov. Trust (Gr) 12.0 0.7% 2.3% 11.0% 12.0%

    (The above table only shows the best performing gilt funds over 12-months)

    On the other hand, investments in stocks or equity funds are at the higher end of the risk spectrum. Consequently returns should be commensurate with the risk and investors should be rewarded with higher returns, as opposed to say a gilt fund investor. The operative words in the above statement are ‘should be’.

    Open-ended, Growth Schemes NAV
    (Rs)
    Last
    week
    Last
    month
    Last
    year
    Since
    inception
    Dhanavikas (1) 8.0 1.4% -5.0% -30.5% -2.8%
    Pru ICICI Growth (Gr) 20.8 1.2% -8.8% -31.7% 32.8%
    Taurus Starshare 8.4 -1.1% -6.9% -32.0% -3.7%
    DSP ML Equity Fund 16.9 0.5% -3.8% -32.6% 22.8%
    ING Growth (Gr) 13.8 3.9% -16.1% -33.6% 22.7%
    Grandmaster 1993 10.8 0.7% 4.7% -35.2% 0.1%
    Canbonus 9.7 2.9% -4.4% -35.4% 2.0%
    IL&FS Gr & Val (Gr) 12.2 1.2% -8.1% -37.5% 0.7%
    JM Equity Fund (Gr) 9.8 2.1% -9.5% -38.2% 0.2%
    K P Prima Fund (Gr) 20.8 4.1% -1.9% -41.5% 10.9%
    Magnum Equity Fund 12.7 1.3% -9.0% -42.1% 13.6%
    Birla Advantage Fund 31.2 1.0% -11.5% -43.2% 27.0%
    Magnum Global Fund 9.9 2.3% -10.3% -48.7% 1.6%
    Magnum Multiplier Plus 1993 14.5 -2.1% -13.9% -56.1% 6.1%

    (The above table only shows the worst performing diversified growth funds over 12-months)

    However, as the table above shows, over the last 12 months equity funds have performed most dismally, punishing investors for taking a higher risk. As opposed to that, gilt funds (see first table) have rewarded investors with higher returns, despite being a low-risk investment.

    So while high risk must go hand-in-hand with high returns, that may not always be the case. Over the last 12 months, given the volatility in the markets and the software meltdown, investors have learnt the hard way that growth funds can be anything but that. And that gilt funds maybe low risk, but the returns could be much higher.

     

     

    Equitymaster requests your view! Post a comment on "Gilt funds – Low risk, higher returns". Click here!

      
     

    More Views on News

    The Right Financial Advisor Is Around the Corner (Outside View)

    Mar 10, 2016

    An opportunity to find an impeccably trustworthy and competent financial guardian is in the offing.

    Why financial planning should be dull and boring (Mutual Fund Corner)

    Feb 29, 2016

    Most financial planners come out as whiz kids who throw around financial jargon. But financial planning can be actually easy, provided one follows a disciplined approach.

    What Are E-Wallets And How To Use Them (Mutual Fund Corner)

    Feb 12, 2016

    PersonalFN highlights the benefits of parking a portion of your expenses in e-wallets and using them efficiently.

    Is Consumption Boom Over In India? (Mutual Fund Corner)

    Feb 2, 2016

    Mutual funds take a bearish call on the FMCG sector. The sector has started playing out due to a combination of slower growth and expensive valuations.

    How to Find a Saint Amongst Sinners? (Mutual Fund Corner)

    Feb 1, 2016

    Ethical practices help build long lasting relationships, and healthy long-term business relationships are often mutually rewarding. But PersonalFN is of the view that the financial services industry in India seems to have forgotten this.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    MARKET STATS