As the name suggests, Birla sun life dynamic bond fund schemes are dynamic bond in terms of structure and maturity outline. A dynamic bond fund aims to generate ‘optimal’ returns in both rising and falling market scenarios. It all depends on the functions of the fund manager and the selection of the portfolio. Generally, these funds have large-scale assets under management (AUM), which run-up to a portfolio of several thousand crore rupees.
There can sometimes be a long pause between the rises in interest rates. It may affect the profitability of the bond investor. Dynamic bond funds are, therefore, an excellent option for those wishing to play for the interest rate cycle. Here, fund managers are ‘dynamically’ trading instruments of different maturity periods according to expected speed changes. For example, a fund manager increases grip in long-term instruments such as gilts during a falling interest rate scenario.
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The primary purpose of Birla sun life dynamic bond fund is to obtain returns in any situation.
Dynamic bond funds are dynamic in terms of structure and maturity profile. The main goal of a bond is to produce returns in any situation, whether it is a rise or a fall in the market. It focuses on the decision and portfolio management of the fund manager. Generally, these funds have large-scale assets under management (AUM), which run-up to a portfolio of several thousand crore rupees.
Below are the features and benefits of the fund:
- The role of the asset manager plays an important role. The funds’ manager’s view of the interest rate is exceptionally important.
- Macroeconomic factors can affect returns from all dynamic bond funds
- Dynamic bond funds are also vulnerable to certain risks. These funds are better than short-term funds as they are unable to use the term strategy.
- Bond prices are inversely proportional to different interest rates. So if the interest rate rises, the bond price will go down and vice versa.
- Investors in bond funds must hold their investment for at least three years to earn indexation perks on capital gains.
- Aditya birla sun life midcap fund is an actively managed portfolio of good credit quality bonds and money market instruments to provide investors with reasonable returns and liquidity.
Conclusion: Bond funds are necessary funds that invest heavily in bonds, stocks, and other debt instruments. It is popularly regarded as a debt fund. Debt funds come with target-short-term funds, which should invest in long-term assets and long-term funds.
A dynamic bond fund is excluded from those restrictions. Dynamic bond funds are called progressive due to their flexibility in terms of structure and maturity. The fund manager can assign shares between short- and long-term bonds, which correspond to the market’s volatile interest rates. Dynamic bond funds are ideal for investors who are not able to make calls with interest rates in the future.