Dynamic bond funds are meant for debt mutual fund investors who do not want to take calls on the interest rate movements in near term. Interest rate changes have a significant impact on debt funds, especially long-term and gilt schemes.
In times when estimates and assumptions are being questioned or proven wrong consistently due to unforeseen factors, it makes sense to stick with equity schemes that have been through long market cycles. Schemes which have been in existence for more than 15 years is a good criterion.
ICICI Prudential Balanced Advantage has given returns of 7.2%, 11.5% and 11.4% in the past five-year, seven-year and 10-year periods, while its peers have given an average return of 5.8%, 10.2% and 8.9% respectively over the same periods.
As per Sebi norms, corporate bond funds have the mandate to invest at least 80% of their corpus in the highest-rated corporate bonds. That means these schemes would invest most of their corpus in corporate bonds that are rated AAA.
We have noted that the performance of Nippon India Hybrid Bond Fund continues to suffer - the scheme is in the fourth quartile for the last three months. It was in the third quartile for three months before that.
Did large-caps beat mid- and small-caps? Which mutual fund houses boasted of superior performance? Though benchmark indices shot up in 2019, the broader market didn’t do too well. ET Wealth analyses the returns of diversified equity mutual funds across time periods.
Among multi-cap schemes, Kotak Standard Mulitcap is a stable performer in longer duration cycles of markets. The scheme’s fund manager Harsha Upadhyaya has been careful in the construction of the portfolio.
"Axis All Seasons Debt Fund FOF is a unique product in the debt basket. It aims at adequate diversification. Especially at this point when there is a lot of confusion among investors about debt funds, this can be a go to scheme."