Net inflows of Rs 241.3 crore in June as against net outflows of Rs 105.74 crore in May under Gilt funds
(including Gilt Fund
with 10-year constant duration) reflect Reserve Bank of India's (RBI) stance to lower interest rates, according to AMFI.
New Delhi: Investors have pulled out more than Rs 58,000 crore from various mutual fund (MF) schemes in May on account of huge outflow from money market and gilt funds
Falling interest rates also benefit gilt funds
. The 10-year government bond yield fell from 8.5 per cent at the end of 2014 to 7.7 per cent in January 2015.
A few long-term gilt funds
have given more than 6% returns.
However, he points out that in the early part of the year NRE deposit rates were in the region of nine to 9.5 per cent, while many an income, bond and gilt funds
have delivered returns in excess of 12 per cent during the year.
Holders of UK gilt funds
have seen spectacular returns this year as demand has driven prices up.
Experts say that it may be a good time to enter income and gilt funds
when bond yields touch 8.5 per cent.
In fact, due to steep rate cuts, bond prices moved up and long-term debt funds as well as gilt funds
delivered astounding returns of up to 20-30 per cent during this period.
They've done alright recently!" Certain gilt funds
that had been favoured at the time have since returned an average of only 2.4%.
Traditionally, DC pension savers approaching retirement are told to move money gradually away from riskier equity holdings and into lower risk areas like bonds and gilts, possibly gilt funds
- typically by 10% of fund value per year in the decade up to retirement.
Scheme G, which invests in government securities, has given an average return of 22 per cent against 17 per cent by gilt funds
during the same period.