Dynamic bond fund assets rise 400% in ’12 on rate uncertainty
As a category, the assets under management (AUM) of these funds grew about 400% between December 2011 and November 2012. Birla Sun Life Dynamic Bond Retl Gr, the largest dynamic bond fund in terms of assets, saw its AUM rise 310% in the period to R14,744 crore. Assets of HDFC Medium Term Opp Gr rose from a little over R80.8 lakh in December 2011 to over R1,658 crore in November 2012, growing more than 200,000% in the process.
Assets of ICICI Pru Income Opps Gr, IDFC Dynamic Bond A Gr, Reliance Dynamic Bond Gr and SBI Dynamic Bond Gr funds grew more than 1,000% in the period. However, Taurus Dynamic Income Gr (-56%), UTI Dynamic Bond Gr (-35%), Canara Robeco Dynamic Bd Reg Gr (-27%) and Sundaram Flexible Flex Inc Gr (-2.5%) saw a decline in their assets in the period.
Inflationary pressure and volatile currency movements in 2012 made it difficult for the RBI to take a call on key interest rates. And it was this uncertainty that prompted investors to flock to dynamic bond funds, said market observers. “The uncertainty surrounding the interest rate environment drove investors to these funds,” said Dhruva Chatterji, senior research analyst, Morningstar India.
As a category, dynamic bond funds have given average returns of 10.25% in 2012 compared with returns of 8.6% in calendar year 2011. The funds
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