Tipping Point: Will returns from gilt funds continue to be subdued?

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Returns from gilt funds turn negative when interest rates rise. The category has continued to deliver lower returns compared to other debt fund categories as interest rates are moving up currently. As interest rates are expected to rise further, they are not an attractive investment avenue currently. Investment advisors say that gilt funds are not an ideal choice for retail investors as they are volatile and highly sensitive to interest rate movements. Even when interest rates are falling, investors need to time their entry and exit in these funds. This should be done under the guidance of an investment advisor.

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