I want to make lump sum investment of Rs 3 lakhs for the next couple of years. Would it be safe to invest in dynamic bond funds considering higher returns compared to bank fixed deposit?
-Rasesh Shah
By ‘couple of years’, we assume you are looking to invest for next three to five years. For enhanced returns, dynamic bond funds look like an opportune investment. If you want a more safe option, you could even consider short-term funds.
Dynamic Bond funds can invest in all kind of debt instruments with varying maturities, depending on interest rate scenario. Such flexibility helps in uncertain times. These funds adapt themselves to the changing interest rate scenario, thus reducing interest rate risk to some extent.
Some of the good performing dynamic bond funds are Birla Sun life Dynamic Bond, DSPBR Strategic Bond and ICICI Prudential Dynamic Bond.
This article was originally published on May 28, 2013.
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