Investors in dynamic bond funds are distraught because of the poor performance of the schemes in the last three months. The category has given an average return of 0.52 per cent in the last one week, 0.70 per cent in the last one month and -0.43 per cent in the last three months.
"The performance of dynamic bond funds has been impacted on account of the changing monetary policy stance from accommodative to neutral," Renu Pothen, Research Head, Fundsupermart.com. In the monetary policy review held in February 2017, the Reserve bank of India surprised the market with a status quo on rates. Most debt fund managers were betting on a 25-basis-point rate cut as the system was awash with liquidity after the central government took some currencies out of circulation.
