Are these dynamic bond funds good?

I have invested in UTI Bond Fund. I am thinking of investing in Canara Robeco Dynamic Bond Fund. I want low risk on principal. Are these plans good?
--अभिषेक जंडियाल

It seems, you have invested in UTI Dynamic Bond Fund and now thinking of investing in another dynamic bond fund. Dynamic bond funds are ideal for investors looking to invest in debt funds for a slightly longer period of three to five years. Dynamic bond funds are recommended to regular investors because they can leave the job of taking a call on interest rates to the fund managers in these schemes. It is very important to time the entry and exit in long-term debt funds based on interest rate movements, as these schemes are sensitive to interest rate movements. A falling rate regime is beneficial for long-term debt schemes because of the inverse relationship between yields and price of bonds. In short, if you are investing for a period of three to five years, you can invest in dynamic bond funds and hope for a marginally higher returns than bank deposits. Do not panic if there is a short-term volatility. Stay invested to protect your capital and get better tax-adjusted returns. Debt funds sold after three years qualify for long-term capital gains tax of 20 per cent with indexation benefit.


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