Gilt funds invest in government securities. Credit risk is typically minimal relative to corporate debt, but interest-rate risk can be high because portfolios often run meaningful duration.
Who might use gilt funds
- Investors expressing a deliberate rate view with a suitable horizon.
- Portfolios that want sovereign exposure without taking corporate credit risk.
- Not ideal as a short-term savings substitute.
Conclusion
Gilt funds are rate instruments first. Size them as tactical or long-horizon specialists, and never confuse sovereign credit quality with short-term NAV stability.