Q1. [2] § What is NAV? § What is a Fund Offer Document? § What is Active Fund Management?
What is meant by ‘Gilt Funds’ ?
Previously asked in CBSE board exam
2023 92 Q14
Generated by claude-sonnet-4-6 · 2026-06-15 07:08 · grounding rag
Model Answer
Gilt Funds are mutual funds that invest exclusively in Central and State Government securities. Since these are government-backed bonds, they provide a secured return and ensure safety of the principal amount. They are best suited for medium to long-term investors who are risk-averse.
Source: What are the different types of Mutual Funds?, Chapter 7
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Explanation
- The examiner expects two key points: (1) what gilt funds invest in (government securities), and (2) their key features (secured return, principal safety, suited for risk-averse investors).
- Avoid confusing gilt funds with debt/income funds — gilt funds specifically invest in government securities only, not corporate bonds or debentures.
- Mentioning "Central and State Government securities" earns full credit; don't just write "government bonds" without this detail.
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