India, May 14 -- If you have invested in a gilt fund, you must have noticed that the returns have been subdued in the last one year or so. It is happening because yields have been rising for the last one year or so. Rising yields lead to a fall in bond prices, thereby leading to a fall in the NAV of gilt funds and lower returns. In this article, we will understand how rising yields impact bond prices and gilt fund returns.

Last year, in May 2025, yields on the 10-year Government Securities (G-secs) bottomed out at levels of around 6.20%. Since then, the yields have been rising. On 6 June 2025, the RBI, in its MPC meeting, delivered a huge 50 basis points cut in the Repo Rate from 6.00% to 5.50%. The RBI changed the policy stance from acc...