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Dynamic Bond Funds

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I dont see debt as a powerful wealth creator (compared to equities). I use them for the following reasons

1. Provide a base upon which the rest of the investment ladder is constructed (using equity schemes)

2. Park money for temporary reasons (emergency fund, near term needs such as kids school fees, switch to equity schemes etc.)

3. Regular income (such as monthly income to provide retirees etc.)

In view of that, i invest in various debt schemes. My debt portfolio will be spread across almost all type of schemes (ranging from liquid, short term, MIP, hybrid funds etc.)

Rate cut is linked to cash liquidity in the system.

The first thing that happens is that the rates of short-term instruments (bonds, fixed deposits etc.) will come down.

Some shifting towards long-term debt funds can be seen.

Our fund managers will consider all these scenarios.

A dynamic bond fund, as the name suggests, will be a dynamic one.

The fund manager takes a call as to which is the most appropriate security to invest in.

Hence, we need not worry or time our investments exclusively considering possible rate cuts.

If our investing horizon is between 1 to 3 years, you can go for dynamic bond funds.

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