Dynamic Bond Funds: Achieving 9.3 percent annualized return in last 10 years; all you need to know about it

Dynamic bond funds are a type of debt investment option that offers the convenience of switching between short and long-term securities, making them a good choice for managing market volatility. They are open-ended debt schemes that invest in bonds with varying maturities based on where the highest returns are expected. This allows them to generate reasonable returns in all market conditions. These funds are suitable for investors who do not want to frequently switch between portfolio strategies, as they offer a fixed income regardless of market conditions. They are also a good choice for investors with moderate risk appetite who are willing to stay invested for at least three years in order to benefit from investment calls.

One of the top-performing dynamic bond funds is ICICI Prudential All Seasons Bond Fund, which has a consistently strong track record of more than 10 years and is the largest scheme in terms of assets in its category. Its portfolio decisions are based on an in-house model that takes into account a range of factors, including macroeconomic conditions and interest rates.

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The fund has provided returns of 7.1 per cent, 7.2 per cent, and 9.3 per cent in the past three, five, and ten years, respectively, which are higher than many other funds in its category. It has also demonstrated a consistent increase in net asset value (NAV) over various interest rate periods and under adverse circumstances.

It is important to note that debt investing, including dynamic bond funds, can be impacted by macroeconomic factors and interest rates. However, these funds offer a fixed income and can be a good choice for investors looking for long-term investment options with moderate risk. It is also worth considering that in order to benefit from investment calls in a dynamic bond fund, it is necessary to stay invested for at least three years or more. Overall, dynamic bond funds can be a useful tool for managing market volatility and generating reasonable returns in a variety of market conditions.