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What Are Dynamic Bond Mutual Funds & Who Should Invest?

Is a Dynamic bond fund actually dynamic? Read this blog to know what the name means. Find out how a Dynamic bond fund works, how it works, and if you should invest in dynamic bond funds using Cube Wealth.
November 8, 2024
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The word dynamic means “active”, and that’s exactly what a Dynamic bond mutual fund does - it actively trades securities based on the rising and falling interest rates in India. 

Let’s put the dynamism of Dynamic bond mutual funds to test by understanding how they work, what they invest in and whether or not you should invest in Dynamic mutual funds. 

What Are Dynamic Bond Mutual Funds?

Dynamic bond mutual funds are debt funds that invest in bonds classified as government securities. This might make you think that Dynamic bond funds are exactly like any other debt fund, but there’s a catch. 

The fund manager who handles the Dynamic bond fund has the freedom to buy bonds of any duration. Other debt funds like 10-year Gilt funds do not have this freedom, since they can only invest in Gilts that mature in 10 years.

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How Do Dynamic Bond Funds Work?

Debt funds, in general, are affected by the rising and falling interest rates that are dictated by the RBI. This may lead to 3 scenarios:

  • Stagnant Interest Rates

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