Investors should actively consider dynamic bond funds, especially with the expectation of a fall in bond yields, say experts. They, however, need to have a longer holding period of atleast two to three years to ride out the intermittent volatility. In dynamic bond funds fund managers have the flexibility to adjust the portfolio’s duration and positioning based on their predictions of interest rate movements. When interest rates start falling, bond prices rise and longer maturity bonds gain more as these are more sensitive to rate changes.
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