The rule behind "best"
"Best" is not one thing, so this post fixes a rule and applies it the same way in every category of this series. Of the 23 gilt funds with a 3-year record, 7 are open to new money, hold at least ₹1,000 crore (average AUM, July–September 2026) and have a 5-year record. They are ranked by 3-year compounded annual return, Direct plan, Growth option, from NAVs to 27 October 2026. On that rule the leader is Bandhan Gilt Fund at 8.32% a year, against a category median of 6.02%. The same fund tops the list with no filter applied.
A gilt fund puts at least 80% in government securities of any maturity. There is no credit risk, but there is full interest rate risk: when bond yields rise the NAV drops, and the longer the fund's average maturity, the bigger the drop.
The top five
| Fund | 1 year | 3 years | 5 years | 10 years | Expense ratio | AUM (₹ crore) |
|---|---|---|---|---|---|---|
| Bandhan Gilt Fund | 7.21% | 8.32% | 6.42% | 7.65% | 0.57% | 1,800 |
| SBI Gilt Fund | 2.72% | 6.40% | 6.14% | 7.29% | 0.49% | 8,245 |
| DSP Gilt Fund | 1.12% | 6.32% | 5.59% | 7.08% | 0.59% | 1,219 |
| Nippon India Gilt Fund | 1.91% | 6.12% | 5.38% | 7.13% | 0.52% | 1,517 |
| ICICI Prudential Gilt Fund | 1.25% | 6.08% | 5.97% | 7.11% | 0.58% | 8,555 |
| Category median | 1.27% | 6.02% | 5.33% | – | – | – |
Returns of a year or more are compounded annual rates. Bandhan Gilt Fund leads the median by 2.29 points a year over three years, and SBI Gilt Fund follows at 6.40%.
Risk: what the lead cost
| Fund | Volatility (3 yr) | Worst fall (3 yr) | Sharpe ratio |
|---|---|---|---|
| Bandhan Gilt Fund | 3.5% | −4.1% | 0.52 |
| SBI Gilt Fund | 2.7% | −3.2% | −0.04 |
| DSP Gilt Fund | 3.8% | −4.2% | −0.05 |
Volatility is the annualised standard deviation of daily returns; the worst fall is the deepest peak-to-trough drop in the last three years. The Sharpe ratio uses a 6.5% risk-free rate.
What a monthly SIP earned
| Fund | 3-year SIP return (a year) | 5-year SIP return (a year) |
|---|---|---|
| Bandhan Gilt Fund | 6.66% | 7.13% |
| SBI Gilt Fund | 4.46% | 5.82% |
| DSP Gilt Fund | 3.54% | 5.27% |
| Category median | 3.54% | 5.21% |
SIP returns are annualised (XIRR) for ₹10,000 a month. They differ from lump-sum returns because each instalment buys at a different price.
Same rule, different crowns
3 different funds take the five measures below, which is the point: the answer depends on what you ask.
| Measure | Fund | Value |
|---|---|---|
| Best 1-year return | Bandhan Gilt Fund | 7.21% |
| Best 5-year return | Bandhan Gilt Fund | 6.42% |
| Lowest expense ratio | HDFC Gilt Fund | 0.46% |
| Lowest volatility | ICICI Prudential Gilt Fund | 2.4% |
| Highest Sharpe ratio | Bandhan Gilt Fund | 0.52 |
Gilt funds are not interchangeable. The 3-year leader returned 2.3 points a year more than the category median, and its 1-year return of 7.21% is far above the other top five, which range from 1.12% to 2.72%. A gap like that usually reflects a different position on maturity, so check each fund's average maturity on its page before comparing.
More in this series
Best large cap fund · Best mid cap fund · Best small cap fund · Best flexi cap fund · Best ELSS fund · Best aggressive hybrid fund · Best multi asset fund · Best large and mid cap fund · Best short duration fund
What this ranking cannot tell you
It looks backward over a single window. It ignores the fund house, the manager's tenure, the portfolio and its overlap with what you already own. Past returns do not predict future ones, and a fund's rank can change with the next month's NAV. For any fund here, open its page to see the full record, and use the compare tool to set two side by side. This is a data read-out, not advice to buy or sell.
Frequently asked questions
Which is the best gilt fund in India in 2026?
On this rule (open-ended, at least ₹1,000 crore AUM, a 5-year record, ranked by 3-year return, Direct plan, Growth option), Bandhan Gilt Fund, at 8.32% a year to 27 October 2026, against a category median of 6.02%. A different rule can give a different answer.
Does the best gilt fund by 3-year return also lead over 1 and 5 years?
Yes, Bandhan Gilt Fund also leads the eligible funds over one year (7.21%) and five years (6.42%).
Which gilt fund has the lowest expense ratio?
HDFC Gilt Fund, at 0.46% for the Direct plan among the eligible funds. Bandhan Gilt Fund charges 0.57%.
This is commentary on published data, not investment advice. WealthTicker is not a SEBI-registered adviser or distributor. Figures are WealthTicker’s own calculations from public data — AMFI’s fund NAVs and disclosures, NSE’s index and FII/DII files, and the fund houses’ monthly portfolios (how we calculate). They are as of the dates stated and can be revised by their source.
Keep reading
Best short duration fund in 2026: Bandhan Short Term leads
Best short duration fund of 2026 on one rule: Bandhan Short Term Fund at 7.62% a year over 3 years vs a 7.20% median. Top five, risk, SIP.
Four biggest gilt funds compared: duration and returns
The four biggest gilt funds, compared on returns, calendar years, risk, SIP results and cost. 3-year range 6.10% to 8.36% a year.
10-year gilt funds: Bandhan vs ICICI vs SBI vs UTI
Four 10-year constant maturity gilt funds to 9 October 2026: Bandhan made 2.96% in a year, UTI 1.81%. All four beat NSE's 10-year G-Sec index after costs.