Dynamic Bond Mutual Funds

Dynamic Bond Funds invest in a mix of debt instruments with different maturities, allowing them to adjust to shifts in interest rates. This adaptable approach can help reduce the impact of rate changes and may offer more consistent returns. These funds can be a good option for investors who want to preserve capital and earn steady income, particularly when the market outlook is uncertain.

Let’s understand in detail what is a dynamic bond fund, the risks involved, and whether they align with your financial goals.

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List of Dynamic Bond Mutual Funds

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Search Result - 22 Mutual Funds

Fund Name	Fund Size (Cr.)	3Y Returns	5Y Returns
360 ONE Dynamic Bond Fund - Direct Growth Debt Dynamic Bond	790	8.69%	7.19%	Invest
ICICI Pru All Seasons Bond Fund - Direct Growth Debt Dynamic Bond	12,846	8.33%	7.09%	Invest
Nippon India Dynamic Bond Fund - Direct Growth Debt Dynamic Bond	4,566	8.19%	6.16%	Invest
Aditya Birla SL Dynamic Bond Fund - Dir Growth Debt Dynamic Bond	1,688	8.12%	7.38%	Invest
PGIM India Dynamic Bond Fund - Direct Growth Debt Dynamic Bond	110	8.03%	6.29%	Invest
DSP Strategic Bond Fund - Direct Growth Debt Dynamic Bond	1,503	8.01%	5.85%	Invest
SBI Dynamic Bond Fund - Direct Growth Debt Dynamic Bond	3,196	7.97%	6.35%	Invest
Kotak Dynamic Bond Fund - Direct Growth Debt Dynamic Bond	2,713	7.93%	6.30%	Invest
Mahindra Manulife Dynamic Bond Fund-Dir Growth Debt Dynamic Bond	54	7.92%	5.88%	Invest
UTI-Dynamic Bond Fund - Direct Growth Debt Dynamic Bond	456	7.92%	9.15%	Invest

Fund Name	1Y Returns	Rating	Fund Size (Cr.)
360 ONE Dynamic Bond Fund - Direct Growth Debt Dynamic Bond	9.25% Fund Size (Cr.) - 790 Invest
ICICI Pru All Seasons Bond Fund - Direct Growth Debt Dynamic Bond	7.72% Fund Size (Cr.) - 12,846 Invest
Nippon India Dynamic Bond Fund - Direct Growth Debt Dynamic Bond	7.87% Fund Size (Cr.) - 4,566 Invest
Aditya Birla SL Dynamic Bond Fund - Dir Growth Debt Dynamic Bond	7.47% Fund Size (Cr.) - 1,688 Invest
PGIM India Dynamic Bond Fund - Direct Growth Debt Dynamic Bond	6.35% Fund Size (Cr.) - 110 Invest
DSP Strategic Bond Fund - Direct Growth Debt Dynamic Bond	4.52% Fund Size (Cr.) - 1,503 Invest
SBI Dynamic Bond Fund - Direct Growth Debt Dynamic Bond	6.56% Fund Size (Cr.) - 3,196 Invest
Kotak Dynamic Bond Fund - Direct Growth Debt Dynamic Bond	6.19% Fund Size (Cr.) - 2,713 Invest
Mahindra Manulife Dynamic Bond Fund-Dir Growth Debt Dynamic Bond	7.29% Fund Size (Cr.) - 54 Invest
UTI-Dynamic Bond Fund - Direct Growth Debt Dynamic Bond	7.04% Fund Size (Cr.) - 456 Invest

What are dynamic bond mutual funds?

Dynamic bond funds fall under the category of debt mutual funds and typically invest in instruments like corporate bonds and government securities. What makes them different is the flexibility they offer in terms of maturity. The fund manager can move between short-, medium-, and long-term bonds, depending on how interest rates are expected to behave.

Because interest rates and bond prices usually move in opposite directions, this flexibility can help manage risks and potentially lead to better returns. Unlike some other debt funds that stick to a fixed strategy, dynamic bond funds are built to adapt to changing market conditions.

How do Dynamic Bond Mutual Funds Work?

Dynamic bond mutual funds work by employing an active management strategy. Fund managers continuously monitor interest rate trends and economic indicators. When Fund managers anticipate that interest rates may fall, they increase the portfolio's duration. This is done by investing in longer-maturity bonds to benefit from potential capital appreciation.

On the other hand, when they expect interest rates to rise, they reduce the portfolio's duration by shifting to shorter-maturity bonds, thus mitigating potential losses. This dynamic adjustment aims to deliver optimal returns regardless of the interest rate cycle.

Features of Dynamic Bond Funds

1. High Liquidity: Investors can buy or sell fund units on any business day, making it convenient for those who may need quick access to their money.
2. Moderate Risk: These funds carry lower volatility compared to equity funds, with active management helping to reduce interest rate risk.
3. Investment Flexibility: Without a fixed maturity mandate, fund managers can shift between short- and long-term instruments to adapt to market changes.
4. Portfolio Churn: Another key Dynamic Bond Fund feature is that fund portfolios are dynamically adjusted, managers may switch between government securities, corporate bonds, or other debt instruments depending on interest rate trends.

Who Should Invest in Dynamic Bond Mutual Funds?

1. Seek Moderate Risk with Growth Potential: Most of the best dynamic bond mutual funds to invest in are ideal for individuals looking for a balance between capital preservation and growth, with a willingness to take on moderate risk.
2. Want to Benefit from Interest Rate Fluctuations: Investors who believe in the expertise of fund managers to capitalise on changing interest rate scenarios will find these funds appealing.
3. Have a Medium-Term Investment Horizon: While there's no strict lock-in, a medium-term horizon (3-5 years) can help investors fully benefit from the fund's dynamic strategy and potential for better returns.
4. Prefer Professional Management: Suitable for those who want experts to handle market decisions. If you're planning to invest in dynamic bond funds, this could be a strategic move.

How to Invest in Dynamic Bond Funds

1. Visit the 5paisa website and click on the "Open Account" option.
2. Enter your mobile number and click "Open a Demat Account."
3. Enter your details and proceed to complete the KYC.
4. Upload any required documents for verification.
5. Sign the E-Form and start investing in dynamic bond funds. With 5paisa, investing in dynamic bond funds is hassle-free and seamless.

Benefits and Risks of Investing in Dynamic Bond Mutual Funds

Benefits:

1. Interest Rate Flexibility: Fund managers dynamically adjust the portfolio duration to capitalise on interest rate movements, potentially leading to better returns.
2. Professional Management: Experienced fund managers actively manage the portfolio, making informed decisions to navigate market volatility and optimise returns.
3. Better Return Potential: Due to their active management and flexibility, dynamic bond mutual funds have the potential to generate better returns compared to passively managed debt funds, especially in volatile interest rate environments.
4. Moderate Risk, Balanced Growth: If you invest in dynamic bond funds, they offer a balanced approach, aiming for steady growth with a moderate risk profile, suitable for investors seeking stability without sacrificing potential gains.

Risks:

1. Allocation Risk: The fund manager's calls on interest rate movements might not always be accurate, leading to suboptimal allocation and potentially impacting returns.
2. Market Volatility Impact: While designed to mitigate interest rate risk, dynamic bond funds are still subject to broader market volatility, which can affect bond prices.
3. Complexity in Strategy: The active and dynamic nature of these funds can make their underlying strategy more complex for a retail investor to fully understand.
4. Macroeconomic Sensitivity: Factors like government policy, inflation, or a recession can influence interest rates and credit risk. In adverse scenarios, defaults or falling bond prices may affect fund performance, especially over short durations.

Factors to Consider While Investing in Dynamic Bond Funds

1. Credit Quality: The credit quality of the underlying debt instruments is crucial. Look for funds that primarily invest in high-rated (AAA/AA+) bonds to minimise credit risk. Lower-rated bonds offer higher yields but come with increased default risk.
2. Expense Ratio: The expense ratio represents the annual fees charged by the fund for managing your investment. A lower expense ratio means a larger portion of your returns stays with you. Compare expense ratios across similar funds before you make a Dynamic Bond Fund investment.
3. Fund's Liquidity: Assess how easily you can redeem your investment. While most open-ended dynamic bond funds offer good liquidity, it's always wise to understand the redemption process and typical settlement times.
4. Historical Performance & Fund Age: While past performance is not an indicator of future results, a consistent track record over various interest rate cycles can provide insights into the fund's management capabilities. A fund with a longer history has demonstrated its ability to navigate different market conditions.
5. Financial Goals & Investment Duration: Align your investment in dynamic bond funds with your financial goals and investment horizon. These funds are generally suited for medium-term goals (3-5 years), where you can benefit from the fund manager's active strategies.

Tax Rules For Dynamic Bond Mutual Funds

Dynamic bond funds are treated as debt mutual funds for tax purposes. Regardless of how long you stay invested, whether for a few months or several years, the gains you earn are added to your total income and taxed as per your applicable income tax slab. There is no distinction between short-term and long-term holding periods when it comes to taxation. This makes it important for investors to consider their income bracket when evaluating the post-tax returns of such funds.

Popular Dynamic Bond Mutual Funds

Fund Name
Min Investment Amt
AUM
3Y Returns

360 ONE Dynamic Bond Fund - Direct Growth

₹ 1000

₹ 7900

8.69%

Min SIP Investment Amt

₹ ₹ 1000

AUM (Cr.)

₹ 790

3Y Return

8.69%

ICICI Pru All Seasons Bond Fund - Direct Growth

₹ 100

₹ 12,8460

8.33%

Min SIP Investment Amt

₹ ₹ 100

AUM (Cr.)

₹ 12,846

3Y Return

8.33%

Nippon India Dynamic Bond Fund - Direct Growth

₹ 100

₹ 4,5660

8.19%

Min SIP Investment Amt

₹ ₹ 100

AUM (Cr.)

₹ 4,566

3Y Return

8.19%

Aditya Birla SL Dynamic Bond Fund - Dir Growth

₹ 1000

₹ 1,6880

8.12%

Min SIP Investment Amt

₹ ₹ 1000

AUM (Cr.)

₹ 1,688

3Y Return

8.12%

PGIM India Dynamic Bond Fund - Direct Growth

₹ 1000

₹ 1100

8.03%

Min SIP Investment Amt

₹ ₹ 1000

AUM (Cr.)

₹ 110

3Y Return

8.03%

DSP Strategic Bond Fund - Direct Growth

₹ 100

₹ 1,5030

8.01%

Min SIP Investment Amt

₹ ₹ 100

AUM (Cr.)

₹ 1,503

3Y Return

8.01%

SBI Dynamic Bond Fund - Direct Growth

₹ 500

₹ 3,1960

7.97%

Min SIP Investment Amt

₹ ₹ 500

AUM (Cr.)

₹ 3,196

3Y Return

7.97%

Kotak Dynamic Bond Fund - Direct Growth

₹ 100

₹ 2,7130

7.93%

Min SIP Investment Amt

₹ ₹ 100

AUM (Cr.)

₹ 2,713

3Y Return

7.93%

Mahindra Manulife Dynamic Bond Fund-Dir Growth

₹ 500

₹ 540

7.92%

Min SIP Investment Amt

₹ ₹ 500

AUM (Cr.)

₹ 54

3Y Return

7.92%

UTI-Dynamic Bond Fund - Direct Growth

₹ 500

₹ 4560

7.92%

Min SIP Investment Amt

₹ ₹ 500

AUM (Cr.)

₹ 456

3Y Return

7.92%

FAQs

How are Dynamic Bond Mutual Funds Taxed?

Short-term gains (units held <3 years) are taxed as per your income tax slab. Long-term gains (units held >3 years) are taxed at 20% with indexation benefits, lowering taxable income.

What is the Lock-in Period of Dynamic Bond Mutual Funds?

Dynamic Bond Mutual Funds generally do not have a lock-in period. Investors can redeem their units anytime.

What is the Risk Rating of Dynamic Bond Mutual Funds?

These funds typically fall under the moderate-risk category, balancing potential returns with stability.

What does a Dynamic Bond Fund’s yield to maturity mean?

Yield to Maturity (YTM) for a dynamic bond fund is the total return anticipated on a bond if it is held until it matures. For a dynamic fund, this is a calculated average based on the underlying portfolio and can fluctuate significantly due to the fund's active management strategy.

How much money should I invest in Dynamic Mutual Funds?

The ideal investment amount depends on your individual financial goals, risk appetite, and overall asset allocation. It's advisable to consult with a financial advisor to determine a suitable amount that aligns with your comprehensive financial plan.

What type of returns can investors expect from Dynamic Bond Funds?

Returns from dynamic bond funds are not fixed and depend on various factors, including interest rate movements, the fund manager's skill, and market conditions. They generally aim to provide stable and moderate returns, often outperforming traditional fixed deposits over the medium to long term.

Where do Dynamic Bond Funds allocate their investments?

dynamic bond mutual funds allocate their investments across various fixed-income instruments such as government bonds, corporate debt, and money market securities. What sets them apart is the flexibility the fund manager has to shift between these instruments, adjusting the portfolio based on changing interest rate expectations and evolving market conditions.

Do Dynamic Bond Funds have a lock-in period?

Most dynamic bond funds are open-ended, meaning there is no mandatory lock-in period. You can typically redeem your units on any business day. However, some funds may have an exit load if you redeem within a very short period (e.g., 30-90 days) to discourage very short-term trading.

Dynamic Bond Mutual Funds

Kickstart your SIP journey with just ₹100!

List of Dynamic Bond Mutual Funds

Category

Sub Category

Rating

What are dynamic bond mutual funds?

How do Dynamic Bond Mutual Funds Work?

Features of Dynamic Bond Funds

Who Should Invest in Dynamic Bond Mutual Funds?

How to Invest in Dynamic Bond Funds

Benefits and Risks of Investing in Dynamic Bond Mutual Funds

Benefits:

Risks:

Factors to Consider While Investing in Dynamic Bond Funds

Tax Rules For Dynamic Bond Mutual Funds

Popular Dynamic Bond Mutual Funds

360 ONE Dynamic Bond Fund - Direct Growth

₹ 1000

₹ 7900

8.69%

Min SIP Investment Amt

₹ ₹ 1000

AUM (Cr.)

₹ 790

3Y Return

8.69%

ICICI Pru All Seasons Bond Fund - Direct Growth

₹ 100

₹ 12,8460

8.33%

Min SIP Investment Amt

₹ ₹ 100

AUM (Cr.)

₹ 12,846

3Y Return

8.33%

Nippon India Dynamic Bond Fund - Direct Growth

₹ 100

₹ 4,5660

8.19%

Min SIP Investment Amt

₹ ₹ 100

AUM (Cr.)

₹ 4,566

3Y Return

8.19%

Aditya Birla SL Dynamic Bond Fund - Dir Growth

₹ 1000

₹ 1,6880

8.12%

Min SIP Investment Amt

₹ ₹ 1000

AUM (Cr.)

₹ 1,688

3Y Return

8.12%

PGIM India Dynamic Bond Fund - Direct Growth

₹ 1000

₹ 1100

8.03%

Min SIP Investment Amt

₹ ₹ 1000

AUM (Cr.)

₹ 110

3Y Return

8.03%

DSP Strategic Bond Fund - Direct Growth

₹ 100

₹ 1,5030

8.01%

Min SIP Investment Amt

₹ ₹ 100

AUM (Cr.)

₹ 1,503

3Y Return

8.01%

SBI Dynamic Bond Fund - Direct Growth

₹ 500

₹ 3,1960

7.97%

Min SIP Investment Amt

₹ ₹ 500

AUM (Cr.)

₹ 3,196

3Y Return

7.97%

Kotak Dynamic Bond Fund - Direct Growth

₹ 100

₹ 2,7130

7.93%

Min SIP Investment Amt

₹ ₹ 100

AUM (Cr.)

₹ 2,713

3Y Return

7.93%

Mahindra Manulife Dynamic Bond Fund-Dir Growth

₹ 500

₹ 540

7.92%

Min SIP Investment Amt

₹ ₹ 500

AUM (Cr.)

₹ 54

3Y Return

7.92%

UTI-Dynamic Bond Fund - Direct Growth

₹ 500

₹ 4560

7.92%

Min SIP Investment Amt

₹ ₹ 500

AUM (Cr.)

₹ 456

3Y Return

7.92%

Other Calculators

FAQs

How are Dynamic Bond Mutual Funds Taxed?

What is the Lock-in Period of Dynamic Bond Mutual Funds?

What is the Risk Rating of Dynamic Bond Mutual Funds?

What does a Dynamic Bond Fund’s yield to maturity mean?

How much money should I invest in Dynamic Mutual Funds?

What type of returns can investors expect from Dynamic Bond Funds?

Where do Dynamic Bond Funds allocate their investments?

Do Dynamic Bond Funds have a lock-in period?

Open Free Demat Account

Dynamic Bond Mutual Funds

Kickstart your SIP journey with just ₹100!

List of Dynamic Bond Mutual Funds

Category

Sub Category

Rating

What are dynamic bond mutual funds?

How do Dynamic Bond Mutual Funds Work?

Features of Dynamic Bond Funds

Who Should Invest in Dynamic Bond Mutual Funds?

How to Invest in Dynamic Bond Funds

Benefits and Risks of Investing in Dynamic Bond Mutual Funds

Benefits:

Risks:

Factors to Consider While Investing in Dynamic Bond Funds

Tax Rules For Dynamic Bond Mutual Funds

Popular Dynamic Bond Mutual Funds

360 ONE Dynamic Bond Fund - Direct Growth ₹ 1000 ₹ 7900 8.69% Min SIP Investment Amt ₹ ₹ 1000 AUM (Cr.) ₹ 790 3Y Return 8.69%

ICICI Pru All Seasons Bond Fund - Direct Growth ₹ 100 ₹ 12,8460 8.33% Min SIP Investment Amt ₹ ₹ 100 AUM (Cr.) ₹ 12,846 3Y Return 8.33%

Nippon India Dynamic Bond Fund - Direct Growth ₹ 100 ₹ 4,5660 8.19% Min SIP Investment Amt ₹ ₹ 100 AUM (Cr.) ₹ 4,566 3Y Return 8.19%

Aditya Birla SL Dynamic Bond Fund - Dir Growth ₹ 1000 ₹ 1,6880 8.12% Min SIP Investment Amt ₹ ₹ 1000 AUM (Cr.) ₹ 1,688 3Y Return 8.12%

PGIM India Dynamic Bond Fund - Direct Growth ₹ 1000 ₹ 1100 8.03% Min SIP Investment Amt ₹ ₹ 1000 AUM (Cr.) ₹ 110 3Y Return 8.03%

DSP Strategic Bond Fund - Direct Growth ₹ 100 ₹ 1,5030 8.01% Min SIP Investment Amt ₹ ₹ 100 AUM (Cr.) ₹ 1,503 3Y Return 8.01%

SBI Dynamic Bond Fund - Direct Growth ₹ 500 ₹ 3,1960 7.97% Min SIP Investment Amt ₹ ₹ 500 AUM (Cr.) ₹ 3,196 3Y Return 7.97%

Kotak Dynamic Bond Fund - Direct Growth ₹ 100 ₹ 2,7130 7.93% Min SIP Investment Amt ₹ ₹ 100 AUM (Cr.) ₹ 2,713 3Y Return 7.93%

Mahindra Manulife Dynamic Bond Fund-Dir Growth ₹ 500 ₹ 540 7.92% Min SIP Investment Amt ₹ ₹ 500 AUM (Cr.) ₹ 54 3Y Return 7.92%

UTI-Dynamic Bond Fund - Direct Growth ₹ 500 ₹ 4560 7.92% Min SIP Investment Amt ₹ ₹ 500 AUM (Cr.) ₹ 456 3Y Return 7.92%

Other Calculators

FAQs

Open Free Demat Account

360 ONE Dynamic Bond Fund - Direct Growth

₹ 1000

₹ 7900

8.69%

Min SIP Investment Amt

₹ ₹ 1000

AUM (Cr.)

₹ 790

3Y Return

8.69%

ICICI Pru All Seasons Bond Fund - Direct Growth

₹ 100

₹ 12,8460

8.33%

Min SIP Investment Amt

₹ ₹ 100

AUM (Cr.)

₹ 12,846

3Y Return

8.33%

Nippon India Dynamic Bond Fund - Direct Growth

₹ 100

₹ 4,5660

8.19%

Min SIP Investment Amt

₹ ₹ 100

AUM (Cr.)

₹ 4,566

3Y Return

8.19%

Aditya Birla SL Dynamic Bond Fund - Dir Growth

₹ 1000

₹ 1,6880

8.12%

Min SIP Investment Amt

₹ ₹ 1000

AUM (Cr.)

₹ 1,688

3Y Return

8.12%

PGIM India Dynamic Bond Fund - Direct Growth

₹ 1000

₹ 1100

8.03%

Min SIP Investment Amt

₹ ₹ 1000

AUM (Cr.)

₹ 110

3Y Return

8.03%

DSP Strategic Bond Fund - Direct Growth

₹ 100

₹ 1,5030

8.01%

Min SIP Investment Amt

₹ ₹ 100

AUM (Cr.)

₹ 1,503

3Y Return

8.01%

SBI Dynamic Bond Fund - Direct Growth

₹ 500

₹ 3,1960

7.97%

Min SIP Investment Amt

₹ ₹ 500

AUM (Cr.)

₹ 3,196

3Y Return

7.97%

Kotak Dynamic Bond Fund - Direct Growth

₹ 100

₹ 2,7130

7.93%

Min SIP Investment Amt

₹ ₹ 100

AUM (Cr.)

₹ 2,713

3Y Return

7.93%

Mahindra Manulife Dynamic Bond Fund-Dir Growth

₹ 500

₹ 540

7.92%

Min SIP Investment Amt

₹ ₹ 500

AUM (Cr.)

₹ 54

3Y Return

7.92%

UTI-Dynamic Bond Fund - Direct Growth

₹ 500

₹ 4560

7.92%

Min SIP Investment Amt

₹ ₹ 500

AUM (Cr.)

₹ 456

3Y Return

7.92%