What we looked at
A target-maturity index fund holds the bonds of an index that all mature around one date, and ends on that date. We took every Direct Growth index fund whose name includes SDL (state development loans), G-Sec, gilt or bond and a maturity year, and that has a one-year NAV record: 71 funds. Funds that matured earlier in 2026 have no return history to show, and index funds that track other things (equity PSU indices, large-mid-cap blends) are left out. Returns are to 16 October 2026.
One year: the longer the date, the lower the return
| Maturity year | Funds | 1-year range | Median 1 year | Median 3 years | Median Direct TER | Median volatility |
|---|---|---|---|---|---|---|
| 2026 | 5 | 5.45% to 6.58% | 5.59% | 7.26% | 0.16% | 0.6% |
| 2027 | 26 | 4.83% to 6.26% | 5.35% | 7.42% | 0.20% | 0.8% |
| 2028 | 17 | 4.21% to 5.60% | 4.81% | 7.47% | 0.20% | 1.0% |
| 2029 | 5 | 3.87% to 4.41% | 4.03% | 7.56% | 0.21% | 1.5% |
| 2032 | 6 | 2.18% to 3.41% | 2.78% | 7.19% | 0.20% | 2.3% |
| 2033 | 6 | 1.84% to 3.00% | 2.45% | 7.07% | 0.18% | 2.3% |
| 2036 | 3 | 1.74% to 1.78% | 1.77% | 7.20% | 0.20% | 3.1% |
(Single funds maturing in 2030, 2031 and 2037 returned 2.95%, 2.41% and 1.48% over a year.)
The one-year median falls from 5.59% for 2026 maturities to 1.77% for 2036, while volatility, measured as annualised standard deviation of daily NAV returns, climbs from 0.6% to 3.1%. A bond that matures later is more sensitive to a change in interest rates, so these funds' prices moved more, in whichever direction rates went. Over three years the picture is very different: medians cluster between 6.83% and 7.56% whatever the date, so over three years most of the difference disappears. The one-year spread between medians is 3.8 points; the three-year spread is 0.7. Our G-Sec index returns by maturity post covers the indices behind these funds.
Same year, different bonds
The 2027 and 2028 maturities are crowded, with 43 funds between them, and the one-year return ranges from 4.21% to 6.26%. Splitting them by what the index holds:
| Index type (2027–28 maturities) | Funds | 1-year range | Median 1 year | Median 3 years | Median TER |
|---|---|---|---|---|---|
| AAA public-sector or financial bonds | 11 | 4.95% to 6.26% | 5.60% | 7.47% | 0.20% |
| SDL only | 11 | 4.58% to 5.72% | 5.39% | 7.52% | 0.20% |
| SDL plus gilt | 11 | 4.72% to 5.45% | 5.02% | 7.46% | 0.19% |
| Gilt only | 10 | 4.21% to 5.04% | 4.87% | 7.32% | 0.20% |
The bond mixes with AAA-rated issuers come first, and the gilt-only funds come last, by 0.73 points a year at the median. Fees are the same 0.19% to 0.20% across all four, so the difference is in the bonds, not in the cost. On the three-year view the gap shrinks to 0.20 points, with SDL funds on top. A higher return from AAA bonds comes with credit risk that a gilt does not carry, and this table does not measure it.
At the top of the year's table are funds holding three-to-six-month financial-sector paper, at 6.66% to 7.05% (for example HDFC's at 7.05%), but they have no maturity year in their names and no three-year record, so they sit outside the table above.
Reading the numbers
- A one-year return is not a maturity yield. These funds hold to a date; a fund bought now and held to its date earns approximately the yield on its bonds today, whatever the past year's price did. Portfolio yield, not the trailing return, is the number to look for; see our debt fund yields post.
- Tracking differs. Funds that follow the same index can differ by a few tenths; our index fund tracking error post covers that.
- Taxes matter. How debt fund gains are taxed is covered in how debt and hybrid funds are taxed.
- Short-dated funds are close to maturing. The 2026 group has only months to run.
What the numbers do not tell you
Ranges are wider than medians. Among 2027 funds the best returned 6.26% and the worst 4.83%; the median hides a spread of 1.43 points.
Each year's sample is small. Three funds make up the 2036 median.
Past returns are not a forecast. The one-year figures reflect one year of interest-rate moves.
None of this is a recommendation to buy or sell any fund.
Frequently asked questions
What have target-maturity index funds returned over the past year?
Across 71 Direct Growth funds with SDL, G-Sec, gilt or bond in the name and a maturity year in it, the median one-year return to 16 October 2026 was 5.59% for 2026 maturities, 5.35% for 2027, 4.81% for 2028, 4.03% for 2029, about 2.8% for 2032 and 1.77% for 2036.
Do funds with the same maturity year return the same?
No. Among 26 funds maturing in 2027 the one-year return ranges from 4.83% to 6.26%. Funds holding AAA public-sector or financial-sector bonds had the highest medians (5.60% for 2027–28 maturities); pure gilt funds the lowest (4.87%).
Are target-maturity funds cheap?
Yes, relative to most debt funds: the median Direct expense ratio is 0.16% to 0.21% across maturity years, and the cheapest (Bandhan's 90:10 SDL plus gilt funds) charge 0.09%. The gap between funds is bigger than the gap in fees.
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
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