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Tag Archives: flexible debt

Managing debt market volatility through dynamic bond funds


There is a general perception (or shall we say a common misconception?) that only equity markets and related investments are volatile while fixed income/debt products give stable fixed returns. While it is true that debt funds seek to protect your capital, they are subject to interest rate risk. What it exactly means is that while one is sure that his or her investment is reasonably safe and is unlikely to fall below the principal over the long term, there is no guarantee on how much you would earn on it. It could be as low as 3-4 % pa or a 10 % plus annual return, depending on the prevailing interest rate scenario. Even during a secular downtrend or an uptrend in interest rates, there could be periods of interim volatility which could affect the returns. Let us understand this in detail-

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