You’ve heard of sector funds in the equity funds space. In the debt funds space, the closest thing to sector funds are those that invest solely in government securities. These are more popularly known as g-sec or gilt funds. However, unlike sector funds, gilt funds benefit from concentration.
What is it about?
Corporations need money for their day-to-day requirements, and therefore borrow from lenders such as banks, mutual funds and insurance companies. Similarly, when the Government of India needs money, it borrows through its banker, the Reserve Bank of India (RBI).
The RBI, in-turn, takes money from the lenders like banks, insurance companies and mutual funds; and passes it on to the government, and issues g-secs in return.
