Bandhan Gilt Fund has outperformed peers in the short and mid-term category with a 7.6% three-year return. The fund consistently beat its benchmark, helping investors seeking exposure to government securities. Performance in this category remains sensitive to interest rate changes and portfolio duration.
Detailed Coverage
Bandhan Gilt Fund has emerged as the leading performer within the gilt – short and mid-term mutual fund category. Data as of July 27, 2026, shows the fund achieved a three-year compound annual growth rate of 7.6%. This return surpassed major competitors in the space, with ICICI Prudential Gilt Fund delivering 7.1% and HDFC Gilt Fund recording 6.4% over the same period.
Comparing Fund Performance and Scale
When evaluating these returns, it is important to consider the size of the assets managed by each fund. Among the top five performers in the category, the ICICI Prudential Gilt Fund maintains a significantly larger corpus, managing approximately ₹8,784.9 crore. The analysis focuses on schemes with a minimum asset size of ₹1,500 crore, providing a comparable set of established funds. While Bandhan Gilt Fund currently holds the top spot for the three-year period, performance rankings in the mutual fund industry are dynamic and can change frequently depending on the time frame analyzed.
Benchmark and Short-Term Trends
Beyond peer comparison, the fund has demonstrated an ability to generate returns above its designated benchmark. Over the three-year mark, the fund outperformed its benchmark by 0.8 percentage points. This gap widened on a one-year basis, where the fund achieved a 6.3% return against a benchmark return of 2.5%, marking an outperformance of 3.8 percentage points. However, investors should note that leadership is not static. For example, in shorter time frames like one month and three months, other schemes such as the SBI Gilt Fund have recently recorded higher returns, highlighting how market cycles impact different funds differently.
Risks and Investor Considerations
Gilt funds are unique because they invest primarily in government securities, which effectively eliminates the risk of corporate default. While this removes credit risk, these funds are not free from other forms of uncertainty. Their net asset values are highly sensitive to interest rate fluctuations and the duration of the securities held in the portfolio. When interest rates change, the market value of government bonds fluctuates, which directly impacts the fund's returns. Investors in this category should monitor the interest rate environment as set by the Reserve Bank of India, as future policy shifts can significantly influence the performance of gilt funds regardless of their past track record.