Debt fund categories that maintain high portfolio duration have performed well over the past year. Long-duration debt funds have given a category average return of 7.7 per cent. Gilt funds (whose duration can vary widely) earned 7 per cent while gilt funds with 10-year constant duration fetched 6.6 per cent. Given these returns, investors may be tempted to invest in them. They should first understand what they are getting into.
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