What is LTGILTBEES and How Does a Rate Cut Affect It?
LTGILTBEES is an ETF (exchange-traded fund) on the NSE, priced at ₹27.96 as of March 26, 2025, up by 0.14% (+0.04). It invests in long-term government bonds (8-13 years maturity) issued by the Government of India. Managed by Nippon India Mutual Fund, it tracks the Nifty 8-13 yr G-Sec Index. It’s low-risk since the government backs these bonds, but its price can change with interest rates. The fund has ₹2,355.97 crores in assets, a low expense ratio of 0.10%, and a return of 6.65% since starting in 2016. How Does a Rate Cut Affect It?
When the RBI cuts interest rates (like the repo rate) new bonds have lower yields so older bonds with higher yields become more valuable. This raises their prices. Since LTGILTBEES holds long-term bonds, its price goes up too.
For example, a 0.25% rate cut can increase bond prices by about 2% (depending on duration). The 0.14% price rise in LTGILTBEES might be due to a recent or expected rate cut. But if rates rise or inflation grows, the price could fall.
Who Should Invest?
LTGILTBEES suits investors who want a safe, low-cost way to invest in government bonds. It’s good if you expect more rate cuts, as the price may rise. But be cautious if rates might increase, as the price c
ould drop.