Gilt funds made 2.55% in a year, the G-Sec index 4.82%

The headline

In the year to Friday 20 March 2026, the median gilt fund returned 2.55%. NSE's index of the 10-year benchmark government bond returned 4.82% over the same twelve months.

A gilt fund owns only government securities, so it carries almost no credit risk. What it does carry is interest-rate risk, and this year that cost it. Only 2 of 22 gilt funds kept pace with the 10-year benchmark index, and all 22 trailed the median liquid fund, which returned 6.32% over the same year.

The fund figures come from daily NAVs dated 20 March 2026, Direct plan, Growth option. Two codes that are extra options of a scheme already counted, with identical returns, are left out. That leaves 23 gilt funds, 22 of them a year old, and 5 constant maturity funds. The index figures are NSE's closing levels on the same day.

The bond indices, by maturity

NSE publishes government bond indices for different maturity buckets. These levels include interest earned, so they are the closest thing to a bond fund's NAV without any costs.

Over the year the order is almost exactly by maturity. Bonds of four to eight years returned 6.52%. Bonds of 15 years and longer lost money, even counting a year of interest.

NSE also publishes a clean-price version of the 10-year benchmark index, which strips out the interest. It fell 1.68% over the year and 2.32% over the last six months. A falling bond price is the same thing as a rising yield. The interest the bond paid covered that fall and more, which is how the full index still made 4.82%.

Where the funds sit

The median gilt fund's 2.55% sits below every maturity index except the 15-year-plus one. That is consistent with a category that, on the whole, held longer bonds than the 10-year benchmark through a year when long bonds did worst.

The constant maturity funds, which must keep their bonds near ten years, finished a little ahead of their index: a median of 5.47% against the index's 4.82%, with the index's three-year volatility at 2.72% and the funds' at 2.55%.

The short windows are flat. The median gilt fund is up 0.04% in a month and 0.19% in three, both absolute, and 13 of the 23 are below where they started 2026.

The ends of the table

The top two funds have the lowest volatility in the category, and three of the bottom four are in its most volatile quarter. In a year when long bonds fell, the funds whose NAVs moved least did best. A gilt fund's volatility mostly reflects how long its bonds are, so this is the maturity table again, seen from the fund side.

Over three years the picture is closer. Only one gilt fund, ICICI Prudential's, beat the 10-year benchmark index's 7.74% a year, and the median trailed it by 0.85 points a year. Part of that is costs, which an index does not pay.

What this does not tell you

It is not a rate forecast. Long bonds lost this year because yields rose. If yields fall, the same long bonds gain the most, and the order in these tables reverses.

Past returns don't predict. A fund at the top here made a maturity call that suited this year. The same call can hurt in the next.

The indices are not investable as they stand. They pay no expense ratio and never trade, so a fund tracking one will trail it slightly.

Tax is at your slab. Gains in a debt fund bought on or after 1 April 2023 are taxed at your income-tax slab rate, however long you hold.

Where to go from here

The gilt fund and 10-year constant maturity gilt pages list every scheme with live figures. The guide to the debt fund duration ladder explains why maturity drives these results.

For the short end of the market, see what liquid funds returned to early March.