Bandhan Gilt Fund has recorded a 7.5% annual return over the last three years, outperforming both its benchmark and peers in the short and mid-term gilt category. The fund manages ₹1,892.4 crore in assets and focuses on government securities, which carry no corporate credit risk but remain sensitive to interest rate changes.
Detailed Coverage
Bandhan Gilt Fund has emerged as a top performer within the gilt short and mid-term mutual fund category, delivering a compound annual growth rate of 7.5% over the past three years. According to data from ACE MF as of July 21, 2026, this performance notably outpaced major competitors. For comparison, the ICICI Pru Gilt Fund delivered a 7.1% return, while the SBI Gilt Fund posted 6.4% over the same three-year period.
Comparison Against Benchmark Performance
The fund's ability to generate returns beyond its target index has been a key factor in its recent performance. While the fund achieved a 7.5% return, its benchmark index returned 6.7% over the three-year window, representing an outperformance of 0.8 percentage points. This gap widened significantly in the shorter term; over the last one year, the fund outpaced its benchmark by 3.7 percentage points, as the benchmark saw a return of only 2.0%.
Asset Management and Fund Strategy
Bandhan Gilt Fund currently manages assets worth ₹1,892.4 crore. The analysis considered funds with an asset base of at least ₹1,500 crore to ensure a fair comparison of management scale. While ICICI Pru Gilt Fund remains the largest in this category with an asset size of ₹8,784.9 crore, the Bandhan fund has demonstrated the capacity to generate top-tier returns while managing its specific portfolio size.
Investors should note that gilt funds exclusively invest in government securities. Because these instruments are backed by the government, they carry effectively no corporate credit risk, meaning there is little danger of a default by the borrower. However, these funds are highly sensitive to interest rate fluctuations in the economy. When market interest rates rise, the prices of existing government bonds typically fall, which can impact the fund's short-term valuation. Conversely, when rates decline, bond prices usually rise. The fund's consistent performance across one-month and three-month periods, during which it delivered returns of 1.3% and 3.3% respectively, reflects its current strategy in navigating these interest rate cycles. The primary monitorable for investors going forward will be how the fund manager adjusts the duration of the portfolio in response to future changes in the Reserve Bank of India’s interest rate policy.