I may be wrong about this, but in general if I can directly invest in the bonds or G-SEC, then the coupon interest rate paid by the government, will become my annual return or yield (Eg 7%) as the initial investment will be redeemed on maturity, assuming it is held till maturity or the duration of the bond.
So my returns are fixed and guaranteed, only if i don’t sell when the interest rates rise and hold till maturity.
But when it comes to investing through Gilt mutual funds, i think they invest in many G-secs having different maturity and varying coupon rates, thereby averaging out the yield, creating uncertainty over any guaranteed returns, and not to forget that they carry some expense ratio too.
And when more ppl invest in this fund, they fund is bound to buy these bonds at the prevailing prices which can be at a premium due to the increased demand, and this can impact the yield it generates. (i could be absolutely wrong here)
In conclusion, i believe the only way to guarantee the yield is to invest directly in the bonds and hold em till maturity.