Bond funds are those which help you to earn when the interest rate falls. They earn by investing in such securities, where a layperson cannot invest. A fund of this category, which has been providing better returns consistently even in the high rate market is SBI Dynamic Bond Fund. The central bank of India, RBI has recently increased the repo rates by 25 bps, which increases the stress among investors who are invested in the fund. So, the financial analysts of MySIPonline have brought you the details about the fund and current changes in repo rate, which has been discussed below:
Snapshot of SBI Dynamic Bond Fund:
Launched in the year 2004, the fund has an AUM of Rs 1,466 Cr as on Jun 30, 2018, with an expense ratio of 1.82%. The fund is currently investing in 8 securities only, who have an average maturity period of approximately two years ten months.
These securities are of Government of India, HDFC Bank, and SIDBI in the form of a government loan, Certificates of Deposits, non-convertible debentures, commercial papers, and Government of India Securities.
Dynamic funds give the independence to fund managers to invest in a vast variety of debt instruments based on their views and ability to predict the interest rate movements. Therefore, the fund is investing in SOV, cash equivalent, A1+, and AAA.
Past Performance Analysis:
SBI Dynamic Bond has delivered the returns of 5.43% since launch. The highest annualised returns of the fund were in the year 2016 with 15.34%. The alpha generated by it on the basis of past three years monthly returns is 1.25%, as on July 31, 2018, provided by the financial analysts of MySIPonline.
The fund has delivered the compounded returns of three years, five years, and seven years were 7.70%, 7.72% and 8.48%, respectively. The three years compounded returns of the fund were outstanding and has also outperformed its benchmark, NIFTY Composite Debt Index as well as category average.
The annualised returns of the fund for the past four years were 12.84% in 2014, 5.83% in 2015, 15.34% in 2016, and 3.91% in 2017. The fund has outperformed its benchmark in 2014, 2016, and 2017. It has underperformed in 2015 by both its benchmark and peers.
The fund has been managed by Dinesh Ahuja since 2011. He has 20 years of experience in the fund management. He joined SBI fund management team in 2010, as a debt researcher. Currently, he is looking after many debt funds of the fund house. He is a commerce graduate and holds a masters degree in finance.
He allocates entire fund corpus across debt securities including Central and State Government securities, debt instruments, and money market instruments on the basis of interest rate scenario. He follows the active duration management strategy to select the stocks.
The fund will let you earn in the high-interest rates also, as the average maturity period of it is low, which shows that instruments in which it is investing are of low risk. At the same time, the fund is investing large corpus in cash securities also, which maintains liquidity of fund.
The fund is suitable for the investors who have an appetite of tolerating a moderately high-risk. The NAV of SBI Dynamic Bond Fund is Rs 21.5184 as on Aug 3, 2018. You may invest in it through SIP and lumpsum mode. For more information regarding investments in mutual funds, you may connect with our experts at MySIPonline.