SBI Dynamic Bond Fund

SBI Dynamic Bond Fund - an open-ended debt mutual fund scheme. It invests in bonds to earn maximum returns without any restriction on their duration. The Fund has a highly dynamic nature. Its fund management team has to consistently make sure whether to invest in short term bonds reaching maturity in a few months or long term bonds scheduled to mature after several years.

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The Fund portfolio includes 27.36% investment in sovereign GOI bonds, 62.69% in cash and cash equivalents and the balance in corporate debt securities issued by various companies. The target of the Fund is to provide attractive returns to investors through an aggressive investment strategy. The Fund managers manage the portfolio actively by investing in top-grade debt securities with varying maturities.

SBI Dynamic Bond Fund is available in the form of 4 Schemes as follows:

  • Growth - Direct
  • IDCW as and when - Direct
  • Growth - Regular
  • IDCW as and when - Regular

Direct plans are when investors have direct access to the Fund House to purchase mutual fund units. Regular plans are those in which investors purchase mutual fund units through the distributor network. 

Investment Details

Parameter Details
Fund Name  SBI Dynamic Bond Fund
Fund House SBI Mutual Fund
Launch Date  09-Feb-2004
Benchmark Nifty Composite Debt TRI
Type Open-Ended
Minimum Investment  Rs. 5,000/- Minimum Additional Investment: Rs.1,000/- Minimum SIP Investment: Rs.500/- Minimum SWP: Rs. 500/- 
Lock-in Period None
Entry Load Not applicable
Exit Load 0.25% will be charged for redemption within 30 days for units above 10% of the investment
Return Performance Above Average
Fund Consistency Above Average
Risk Level Average

Fund Summary

  1. SBI Dynamic Bond Fund Direct Plan-Growth

      • Risk level-Average
      • NAV-Rs. 29.4594 as of 24.05.2021
      • Expense Ratio-0.87%
    • Fund Started-01.01.2013
  2. SBI Dynamic Bond Fund Direct Plan IDCW 

      • Risk level-Average
      • NAV-Rs. 16.4549 as of 24.05.2021
      • Expense Ratio-0.87%
    • Fund Started-01.01.2013
  3. SBI Dynamic Bond Fund Regular Plan-Growth

      • Risk level-Average
      • NAV-Rs. 27.8160 as of 24.05.2021
      • Expense Ratio-1.64%
    • Fund Started-09.02.2004
  4. SBI Dynamic Bond Fund Regular Plan IDCW 

      • Risk level-Average
      • NAV-Rs. 14.5826 as of 24.05.2021
      • Expense Ratio-1.64%
    • Fund Started-09.02.2004

    Fund Manager

    • Mr Dinesh Ahuja (since January 2011)

Fund Returns Summary

SBI Dynamic Bond Fund Direct Plan-Growth - Returns Summary

Time Period Returns Per Year (Annualized)
6 Months 0.97%
1 year 4.80%
2 years 10.48%
3 years 10.09%
5 years 9.39%
Since Inception 8.93%

SBI Dynamic Bond Fund Direct Plan IDCW Quarterly - Returns Summary

Time Period Returns Per Year (Annualized)
6 Months 0.97%
1 year 4.80%
2 years 9.80%
3 years 9.20%
5 years 8.18%
Since Inception 7.56%
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

SBI Dynamic Bond Fund Regular Plan-Growth - Returns Summary

Time Period Returns Per Year (Annualized)
6 Months 0.58%
1 year 4.02%
2 years 9.74%
3 years 9.30%
5 years 8.60%
10 years 8.86%
Since Inception 6.09%

SBI Dynamic Bond Fund Regular Plan IDCW Quarterly - Returns Summary

Time Period Returns Per Year (Annualized)
6 Months 0.58%
1 year 4.02%
2 years 9.04%
3 years 8.37%
5 years 7.30%
10 years 7.26%
Since Inception 5.11%

Summative Pros and Cons Table

Pros Cons
A dynamic bond fund has the freedom to invest in debt securities across investment durations. The Fund has underperformed its Scheme Benchmark: Nifty Composite Debt Index since inception.
Such funds can potentially benefit from both rising and falling interest-rate cycles by suitably altering their investment allocations between long-term and short-term bonds.  Unlike a bank deposit, the Fund has no contracted repayment of capital or interest payout.
A dynamic bond fund can potentially earn steady returns irrespective of the interest rate cycle. Dynamic bond funds are subject to interest rate volatility. A wrong call on interest rate movement may adversely affect the fund returns.

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Benefits of SBI Dynamic Bond Fund

Investment in SBI Dynamic Bond Fund provides the following advantages to the investors.

  1. Dynamic Investment Allocation

     Dynamic bond funds have the freedom to invest in debt securities across both short duration and long duration securities without any restrictions. When interest rates are falling, these funds can invest in long-duration securities and invest in short duration securities when interest rates are rising. Unlike other debt funds, they don’t need to follow any rigid investment mandates, and their flexible investment allocation assists them in benefitting from interest rate movements. 

  2. Positive Track Record

     SBI Mutual Fund has a proven track record of delivering value to its investors over 30 years. The experienced debt fund managers of SBI Mutual Fund have been investing in rated papers of sovereign and corporates with a robust background, clean management quality and sound business and financial strength.

  3. Indexation Benefit

    To attain optimum benefits, it is advisable to invest in dynamic bond funds for the tenure of 3-5 years. By investing for more than three years, one can take advantage of the indexation benefit available under income tax laws. The gains from the sale of dynamic bond funds are taxed at 20% after the indexation benefit. Investors paying tax at the highest tax rate and wanting to invest in debt instruments will benefit from this aspect.

Who Should Invest in SBI Dynamic Bond Fund?

While SBI Dynamic Bond Fund is ideal for an investment horizon of 3-5 years, such funds don't suit all investors. This Fund is not meant for investors who wish to earn fixed returns with low volatility. A dynamic bond fund’s return depends on interest rate movements, and they carry moderately high levels of risk. Funds such as SBI Dynamic Bond Fund are suitable for investors who wish to invest in the bond market but are not competent to make any decisions on interest rate movements. 

Conservative investors, who are loathed to witnessing volatile price movements, are advised to stay away from dynamic bond funds. Although Dynamic Bond funds do not have restrictions on the duration and credit quality of securities, they have to withstand interest rate risk and credit risk. Hence, the broad portfolio of the Dynamic Bond fund may impact the Fund's performance when the interest rates move against the fund manager’s forecast. Only investors who have sufficient money to withstand the inherent risk in these funds may look at investing in them for 3-5 year tenure.

Conclusion

Before investing, it is essential to study the past performance of the Fund. SBI Dynamic Bond Fund’s annualized returns for the last five years have been better than the NIFTY Composite Debt Index benchmark. Investors with a target investment period of 3-5 years in debt instruments may consider investing in SBI Dynamic Bond Fund.

FAQ's

  • Q: Which is preferable for SBI Dynamic Bond Fund? A SIP or a lump sum investment?

    Ans: Investors with a target investment period of 3-5 years in debt instruments may consider investing in SBI Dynamic Bond Fund. Funds such as SBI Dynamic Bond Fund are suitable for investors who wish to invest in the bond market. Still, they are not competent to make any decisions on interest rate movements. In this scenario, it is advisable to adopt the systematic investment plan (SIP) route to spread the duration risk over the investment period.
  • Q: How will I get to know the performance of the SBI Dynamic Bond Fund?

    Ans: Investors may visit the SBI Mutual Fund official website. The link provides details such as Fund facts, CAGR Performance over the last 1, 3 and 5 years and since the Fund's inception. It also provides the SBI Dynamic Bond Fund's performance compared to its benchmark, NIFTY Composite Debt Index.
  • Q: Is SBI Dynamic Bond Fund an effective investment tool for long term wealth creation?

    Ans: Being a debt fund, SBI Dynamic Bond Fund invests in a broad range of debt instruments with the intention of achieving attractive risk-adjusted returns by judiciously balancing credit risk and interest rate movements. Unlike equity funds, the rate of return from a debt fund will not be significantly more than the inflation rate. A dynamic bond fund is not suitable for long term build wealth creation, as it is designed to play the interest rate cycle and is subject to significant volatility at times.
  • Q: What are the various risks associated with investing in SBI Dynamic Bond Fund?

    Ans: Investments in a dynamic bond fund bear inherent risks. These can be the inability to sell securities, market risk, trading volumes, and various types of risks related to interest rate, liquidity, default or reinvestment. It is not possible to eliminate such risks, but one can tend to mitigate them. For this effect, diversification of funds and hedging can be used. To minimize the various risks, the Fund Manager endeavours to construct the portfolio in accordance with the investment restriction specified under SEBI Regulations, which would help mitigate the risks as mentioned above to a significant extent.
  • Q: What are the various SIP/ SWP options available while investing in SBI Dynamic Bond Fund?

    Ans: SBI Dynamic Bond Fund has the following SIP options:
    • Rs.500/- Daily SIP
    • Rs.1,000/- Weekly SIP 
    • Rs.1,000/- Monthly SIP
    • Rs.1,500/- Quarterly SIP
    • Rs.3,000/- Semi-Annual SIP
    • Rs.5,000/- Annual SIP

    Similarly, invested funds may be withdrawn by way of a Systematic Withdrawal Plan (SWP) of minimum Rs.500/- on a monthly/ quarterly/ weekly/ half-yearly/ annual basis.

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