Gilt mutual funds invest only in government securities, ensuring extremely low credit risk.
ICICI, Axis, and Bandhan gilt funds have shown steady 3-year returns of above 7%, highlighting the long-term potential.
Returns depend on interest rate movements, so timing and holding period are crucial.
Gilt mutual funds invest in securities issued only by the central and state governments. The credit risk is minimal as the funds are supported by the government. This makes gilt funds a safer option compared to many other debt funds. However, returns can change depending on interest rate movements. When interest rates fall, gilt funds usually perform well.
Many gilt funds in India are showing stable performance in February 2026. The steady returns make them suitable for investors who prefer safety with reasonable growth.
ICICI Prudential Gilt Fund Direct – Growth is a top choice based on recent performance. The fund booked a 1-year return of 6.66%, while the 3-year and 5-year returns are 8.08% and 6.94%, respectively.
The strong 3-year performance shows decent management during changing interest rate cycles. Consistency across time periods makes this fund attractive for conservative investors who want steady income with low credit risk.
Bandhan Gilt Fund Direct – Growth has shown reliable growth. The 1-year return is 4.97%, the 3-year return is 7.70%, and the 5-year return is 6.12%. The numbers suggest steady returns over time. This fund suits investors who prefer gradual wealth building without taking credit risk.
Also Read - What Happens to Your Money if a Mutual Fund Company Shuts Down?
Baroda BNP Paribas Gilt Fund Direct – Growth has maintained steady profits with a 1-year return of 5.01%, a 3-year return of 7.68%, and a 5-year return of 6.13%. The fund shows balanced performance across short and medium terms. The fund’s key strength is stability.
DSP Gilt Fund Direct – Growth offers moderate performance. The fund has delivered a 1-year profit of 4.67%, a 3-year return of 7.61%, and a 5-year return of 6.33%. The 5-year return of 6% or more reflects steady long-term growth. This fund may suit investors who want exposure to government bonds with a long-term horizon.
Axis Gilt Fund Direct—Growth has delivered balanced returns with 1-year, 3-year, and 5-year returns of 5.45%, 7.80%, and 6.16%, respectively. The 3-year figure close to 8% shows stable long-term management. Performance is slightly lower than the top fund but still strong in the gilt category.
SBI Gilt Fund Direct – Growth is another strong option. The fund reported a 1-year return of 4.96%, while the 3-year and 5-year returns stand at 7.56% and 6.46%, respectively. The 5-year performance highlights consistency over time. The fund benefits from experienced management and a disciplined strategy.
Tata Gilt Securities Fund Direct – Growth has delivered stable results. The 1-year return is 5.06%, the 3-year growth is 7.52%, and the 5-year profit is 6.11%. The performance reflects steady income generation from government securities. Risk remains low due to sovereign backing.
Invesco India Gilt Fund Direct—Growth has posted moderate gains of 4.16%, 7.39%, and 5.78% over one, three, and five years, respectively. Returns are slightly lower than some peers', but the fund still maintains reasonable long-term stability.
Also Read - Best Performing Banking & PSU Mutual Funds to Invest in February 2026
HDFC Gilt Fund Direct – Growth shows balanced results. The fund has posted a 1-year return of 5.06%, a 3-year return of 7.32%, and a 5-year return of 5.85%. The numbers suggest stable management during different interest rate phases. This gilt fund is a reliable choice within the category.
PGIM India Gilt Fund Direct – Growth has generated consistent medium-term performance. The fund delivered returns of 4.15%, 7.30%, and 6.09% over one, three, and five years, respectively. The 3-year return of 7% or more shows healthy growth during recent market cycles.
Gilt mutual funds offer stable and moderate returns with minimal risk. ICICI Prudential Gilt Fund Direct – Growth leads with the highest 3-year return of 8.08% and strong 1-year and 5-year numbers. Other funds such as Axis, Bandhan, Baroda BNP Paribas, DSP, SBI, Tata, Invesco, HDFC, and PGIM India also offer steady performance.
These funds are suitable for investors seeking safety from credit risk while earning moderate returns. Performance may change with interest rate movements, so investment horizon and risk comfort level should always be considered before making a decision.
What are Gilt Mutual Funds?
Gilt Mutual Funds are debt mutual funds that invest only in government bonds and treasury bills.
Are Gilt Mutual Funds safe?
Credit risk is very low because investments are backed by the government, but returns can fluctuate due to interest rate changes.
Which gilt funds performed well in February 2026?
ICICI Prudential Gilt Fund Direct – Growth delivered 8.08% (3Y), Axis Gilt Fund Direct – Growth gave 7.80% (3Y), and Bandhan Gilt Fund Direct – Growth offered 7.70% (3Y).
Who should invest in gilt funds?
Investors looking for stable returns with lower credit risk and a medium- to long-term horizon may consider gilt funds.
How long should investments be held in gilt funds?
A holding period of 3 to 5 years is generally suitable for managing interest rate volatility.