Gilt funds have given the best returns in the debt fund category for the quarter ended March 2016, shows the latest CRISIL Mutual Fund Rankings.
However, the gains have come only in the last quarter. From the past 12 months, gilt funds gave a return of 5.82% which is lower than 8% return delivered by short-maturity debt funds.
Performance of various categories of debt funds
|
Categories |
3 months absolute |
6 months absolute |
1 year absolute |
|
CRISIL – AMFI Gilt Fund Performance Index |
2.85% |
2.20% |
5.82% |
|
CRISIL – AMFI Income Fund Performance Index |
2.46% |
2.08% |
5.52% |
|
CRISIL – AMFI Short Term Debt Fund Performance Index |
2.25% |
3.79% |
8.04% |
|
CRISIL – AMFI Ultra Short Fund Performance Index |
2.13% |
4.00% |
8.40% |
|
CRISIL – AMFI Liquid Fund Performance Index |
2.00% |
3.94% |
8.20% |
Source: CRISIL
The gains came mostly due to hopes of a continuing decline in interest rate. This pushed the long end of the sovereign yield curve (10-year benchmark) down by 30 bps to 7.46% and boosted long-term debt funds, especially gilt funds.
A yield curve is a line that plots interest rate, at a given point of time, of bonds of equal credit rating but different maturity rates. Yield curve gives an idea about the future interest rate and the economic activity related to it.
Image source: Crisil
The AUM of gilt funds grew by 12% in March 2016 to Rs. 16,306 crore from Rs. 14,614 crore in March 2015. However, the number of folios fell marginally to 65,164 in March 2016 from 65,225 in March 2015.
If we compare the AUM data on a quarter on quarter basis, gilt fund assets slipped by 7% to Rs. 16,306 crore in March from Rs. 17,463 crore in December 2015.
