Most investors are clueless about the many advantages that dynamic bond funds offer over other income funds.
In a confusing economic environment,
investors are often left wondering about the kind of financial products they
should invest in. The most important question to answer is whether one should
invest in short-term or long-term funds.
Currently, it is a wiser move to
consider ‘dynamic bonds’. In this context, you could consider the Birla Sun
Life Dynamic Bond
Fund (BSL Dynamic Bond).
- Why invest in dynamic bonds?
A dynamic bond is a debt fund
that, as the name suggests, can change as per changes in interest rate
movements. The investor’s fund manager can choose the duration of the bond
depending on his analysis of the prevailing interest rates. If rates are about
to fall, the manager will invest in long-term instruments. Conversely, he may
invest a bulk of the investor’s money in short-term products if the rates are
likely to rise.
- Why are they advantageous?
Since they can be aligned to suit the
investor as per the rate movements, a dynamic bond offers greater
returns than static bonds. They insulate the investor from the rise or fall of
interest rates because they can be repositioned as per the changing rates. The
BSL Dynamic Bond helps you benefit in both cases – when interest rates fall or
rise.
- When should you invest in dynamic
bonds?
When the situation of debt markets
remains in a state of flux or follows a downward trajectory, a dynamic bond
fund is the safest investment option. In a situation of high inflation and
stagnant interest rates, it can be invested in short term maturity bonds.
Conversely, in a sluggish market, it can be invested for long term Government
securities, for example. The BSL Dynamic Bond helps those who want to earn an
income with capital growth over the short term
- Why are they better than traditional
debt funds?
Traditional debt funds require a sense
of accuracy on the part of the investor. He must commit to investing by
deciding on the future rate trends. This is not seen in a dynamic bond
fund, where the investor does not need to juggle with interest rate volatility.
However, BSL Dynamic Bond cautions investors that their money is at moderate
risk.
- Which dynamic bond fund should you
consider?
The Birla Sun Dynamic Bond Fund is an
open ended regular income product that invests your money in Government
securities, corporate bonds and structured credit instruments. The product
invests only in high quality corporate bonds and Government securities. Also
you can redeem your money at any time on furnishing a redeem request to the
company.
