Investing
Gilt fund
A debt fund that lends only to the government, so there is virtually no risk of default.
A gilt fund buys only government bonds. Since the government is the safest borrower, there is essentially no default risk.
But there is still interest rate risk. When rates rise, the value of existing bonds falls, so gilt fund returns can swing.
They suit investors who want government-grade safety and can handle some ups and downs from rate movements.
For example
When the RBI cuts the repo rate, gilt fund NAVs often jump because their existing higher-interest bonds become more valuable.