What are the portfolio attributes of a debt fund?

Average maturity: Average maturity shows the average residual maturity of the fund meaning the average time until its portfolio matures. In a rising interest rate scenario, funds with shorter maturity are preferred as they are less susceptible to interest rate risk. On the contrary, in a falling interest rate scenario, funds with longer average maturity are preferred as they are more sensitive to interest rate changes. There exists an inverse relation between interest rates and bond prices. Hence the probability of larger capital gain in a falling interest rate scenario is higher in the case of long term debt funds.

Duration: Duration measures the sensitivity of a fund to changes in interest rates. A higher duration indicates that the bond prices will fall more sharply in the event of a rise in interest rate.

Average credit rating: Average credit rating takes into account the credit rating of all the assets in the portfolio and assigns High, Medium or Low credit rating to the overall portfolio.

YTM: Yield to Maturity or its acronym YTM shows the return expected of a bond if held till maturity.




For SBI Dynamic Bond Fund as on May 3, 2017

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