During financial year 2016-17, gilt funds fell out of favour with investors. The category saw a net outflow of Rs 3,306 core that year, compared with a net inflow of Rs 759 crore in the previous financial year. From December 2016 till April 2017, gilt funds saw inflows shrink steadily and this was accompanied by strong outflows too.
This is not surprising given the strong rally in these funds, especially towards the second half of 2016, and the sharp dip in returns as the Reserve Bank of India changed its monetary policy stance in early 2017.