What are the funds that invest exclusively in government securities?

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UP Police SI (दरोगा) Previous Paper 6 (Held On: 19 Dec 2017 Shift 2)
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  1. Tax Saving Fund
  2. Index fund
  3. Belant fund
  4. Gilt fund

Answer (Detailed Solution Below)

Option 4 : Gilt fund
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Detailed Solution

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The correct answer is Guilt fund.

  • Gilt funds are the funds that invest exclusively in government securities.
  • Gilt funds are debt funds that invest primarily in government securities.
  • These funds have no risk of non-payment of interest or principal amount but get affected by interest rate movements as the Government borrowing typically happens to be for a longer duration.
  • Tax saving funds are those funds that qualify for tax deductions under Section 80C of the Income Tax Act.
  • An index fund is a portfolio of stocks or bonds designed to mimic the composition and performance of a financial market index.

Additional Information

  • All types of funds are regulated by the SEBI (Securities Exchange Board of India).
  • In 1996, SEBI formulated the Mutual fund regulation.
  • The headquarters of SEBI is in Mumbai.
  • The Chairman of SEBI is Mr Ajay Tyagi.
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