The recent volatility in the debt market has broken the myth of know-it-all debt fund managers. Dynamic bond funds in particular have turned out to be a disaster for investors.
The Reserve Bank of India’s confused signals on interest rates and the inherent lack of liquidity in the debt market are the key reasons for dynamic funds’ poor returns. “Even if the fund manager knows the direction, there may not be enough liquidity in the bonds he is holding. So, it becomes difficult to get out ..
