This gilt fund has offered 8.99% CAGR since inception

Since its inception on December 29, 1998 the Kotak Gilt Fund has delivered a compounded annual growth rate (CAGR) of 8.99%.

The fund's odyssey began in the wake of India's economic liberalisation and has since sailed through major global and domestic financial storms — the Asian Financial Crisis, the dot-com bubble, the 2008 global financial crisis, 2013 taper tantrum and the recent pandemic-led economic upheaval, Kotak Mutual Fund said.

Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Company Ltd. (KMAMC) said, “Launched 25 years back in 1998, it has witnessed many rate cycles (no credit loss as investment is in gilts) to deliver to investors along with daily liquidity. Kotak Gilt fund – Triveni Sangam of Sovereign credit, daily liquidity and 25 years of service to the investors.”

The mutual fund allocates 100% to sovereign and equivalent assets, including Triparty Repos, ensuring a relatively low credit risk.

Furthermore, exposure to government securities and the inclusion of Floating Rate Bonds provide a cushion against rate shocks.

The fund has utilised various instruments, including Fixed Rate, Floating Rate, and Overnight Index Swap (Derivatives). Kotak Gilt Fund has delivered across timeframes of 1 year, 3 years, 5 years and since inception as on December 31, 2023, the fund house said.

Abhishek Bisen, Head-Fixed Income and Fund Manager, KMAMC and Kotak Gilt Fund manager since 2008 said, “With an early 2024 Fed rate cut expected due to easing inflationary pressure in the US, declining Treasury yields, and a dovish shift in Fed policy, the fund is well-poised from a medium to long term perspective.”

The fund employs various risk management tools and processes, including system-based monitoring, daily monitoring statements, performance evaluations at different levels, internal and operations audits, and periodic reviews by the Risk Management Committee, to mitigate portfolio risk in accordance with SEBI regulations.

The fund's resilience is mirrored in its average 1-year daily rolling return of 9.46% since inception2, with no credit loss for the long-term investors. The recent addition of Indian Government Bonds to the JPM EM loss Bond Index also underscores the fund's and India's growing stature in the global financial bond market arena.