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2 Best Performing Dynamic Bond Funds To Invest In 2021
The Sensex and Nifty50 benchmarks in India are at all-time highs, therefore equity investors may consider starting a Systematic Investment Plan (SIP) in the debt fund category as a hedge against market volatility. As a consequence, Dynamic Bond Funds may be a safer choice for investors looking for a secondary source of income during market downturns. Dynamic Bond Funds are open-ended debt mutual funds that invest in debt and money market products such as Government Securities, corporate bonds, and other debt categories. Dynamic bond funds invest in a variety of various durations. Shorter-term bonds and longer-term bonds are dependent on interest rate fluctuations, resulting in a mix of capital appreciation and interest rate risk reduction.
Government securities, corporate bonds or Non-Convertible Debentures, money market instruments, and other debt categories are the primary allocation holdings of dynamic bonds. Except bonds issued by state governments, corporate bonds and money market instruments issued by private-sector lenders are devoid of credit risk which is examined and a rating is given by different Credit rating companies. While diversifying equity funds in dynamic bond funds, investors must keep in mind that higher-rated instruments have less credit risk but are not purely risk-free and vice versa. Because of the interest rate fluctuations, investors should invest in dynamic bond funds that have a minimum investment term of three years to get excellent returns in a variety of interest rate environments. Here are the two excellent Dynamic Bond Funds rated "No. 1" by CRISIL for investors looking for greater returns in the current bull phase of the market.
IDFC Dynamic Bond Fund Direct-Growth
This fund has been ranked "No.1" by CRISIL, 4 star by Value Research and 5 star by Morningstar which is pretty decent in terms of fund performance in different economic behaviour. According to Value Research, the IDFC Dynamic Bond Fund Direct-1-year Growth's returns were 4.96 percent, and it has generated 9.33 percent average annual returns since its debut. The expense ratio for this medium-sized product in its category is 0.72 percent, which is higher than most other Dynamic Bond funds. The fund's cash holdings are 57.8% and its debt holdings are 42.2 percent. As of 1st October 2021, the fund has a Net Asset Value (NAV) of Rs 29.81 and the Asset Under Management (AUM) of the fund is Rs 3,832.96 Cr. The fund has no exit load and one can start SIP in this fund with Rs 1000.
DSP Strategic Bond Direct Plan-Growth
The recent one-year returns on DSP Strategic Bond Direct Plan-Growth were 5.21 percent, and it has provided an average annual return of 8.76 percent since its debut. GOI, Food Corporation of India, Rural Electrification Corporation of India, and Housing Development Finance Corporation of India are among the fund's top holdings. The expense ratio of this medium-sized Dynamic Bond fund is 0.52 percent, which is comparable to the expense ratio of most other Dynamic Bond funds. The consistency of returns generated by the DSP Strategic Bond Direct Plan-Growth plan is identical to those of other funds in its category and it has a fair potential to limit deficits in a bear market. The fund has a cash holding of 26.9% and a debt exposure of 73.2 percent. The fund's Net Asset Value (NAV) is Rs 2,791.73 crore, and its Asset Under Management (AUM) is Rs 709.09 crore as of October 1, 2021. There is no exit load on this fund, and you may start investing in it with as little as Rs 500.
Best Dynamic Bond Funds To Invest In 2021
Based on CRISIL's rating "No.1"and past performance, here are the two best Dynamic Bond Funds that you may invest in 2021.
| Funds | 1 mth returns | 6 mth returns | 1 Yr returns | 3 Yr returns | 5 Yr returns |
|---|---|---|---|---|---|
| IDFC Dynamic Bond Fund Direct-Growth | 0.17% | 3.43% | 4.96% | 10.74% | 8.51% |
| DSP Strategic Bond Direct Plan-Growth | 0.57% | 3.56% | 5.21% | 10.41% | 7.50% |
| Source: Groww |
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