IDFC Dynamic Bond Fund - Rating & Review - Very Expensive

IDFC Dynamic Bond Fund – Rating & Review – Very Expensive

Roboadviso     Mutual Funds Rating     Posted On, Mon 25th September, 2017     No comments
  • Editor Rating
  • Rated 2 stars
  • 40%

  • IDFC Dynamic Bond Fund
  • Reviewed by:
  • Published on:
  • Last modified: September 25, 2017

IDFC Dynamic Bond Mutual Fund

IDFC Dynamic Bond Fund aims to achieve optimal returns by investing in high quality money market and debt instruments.

Presented below is a comprehensive review of IDFC Dynamic Bond Fund. It offers all the relevant information needed by you so that you can make an informed decision about whether to buy, sell, or hold this fund.

Basic costs and other information

IDFC Dynamic Bond Fund was launched on Dec 01, 2008. It has a track record of nearly 10 years. As of Aug 31, 2017, this debt focused fund has assets of INR 4,784 crores. The minimum required investment for lump sum investment route is INR 5000.

The expense ratio as of Aug 31, 2017 is 1.47 percent which is very high. As of 31st Aug 2017, if investors redeem their fund investment then the exit load is 0%.

Suyash Choudhary since  is the fund manager since October 2010. His educational qualifications include B.A (H) Economics from Delhi University and PGDM from IIM Calcutta. Prior to joining IDFC Mutual Fund he has worked with HSBC Asset Management (India) Pvt. Ltd., Standard Chartered Asset Management Co. Pvt. Ltd. and Deutsche Bank.

Allocation of the fund

As of Aug 31, 2017, the fund’s allocation stands as 96.96 percent in Sovereign Bonds, 3.04% in Money Market and cash instruments

The Credit Quality of Paper is high with majority being AAA. Number of Securities are a total of 25 which is similar to category average.

Average Maturity of papers is 11.06 with Modified Duration being 6.98. This is higher than category average and hence makes the fund highly sensitive to interest rate movement.

The YTM or yield of the fund is 7.15%. Post Expense Yield of the fund is 5.68% which is too low. High expense ratio eats out on the return.

Performance

As of Sep 25, 2017, IDFC Dynamic Bond Fund has produced a return of 9.79 percent per annum  in the last 7-year period. The fund’s yields was higher than the category average of 9.44 percent during the same period. From the time of launch the fund has delivered 8.65 percent per annum return.

In the past 1, 3, and 5 years, the fund has shown 8.92, 10.69 and 9.58 percent return per annum. The 3-year returns of the fund are thus more than 0.62% points higher than the category returns. On a 5-year period, the performance of the fund vis-à-vis the category is better by about 0.65%.

As per data of the past, the fund’s standard deviation, i.e., the volatility of the returns of the fund vis-à-vis its average, is 4.55% as of 31st Aug 2017. This is higher than the category average which is 4.25% for the same period. 

When the returns of IDFC Dynamic Bond Fund are compared with its peers during the past 3 years period, then at 10.69 percent returns it has not done as well as other similar funds like SBI Dynamic Bond Fund (10.87%%); UTI Dynamic Bond Fund (10.85%).

Should I sell, buy, or hold?

IDFC Dynamic Bond Fund is a very expensive with with expense ratio of 1.47%. High expense ratio will eat out the return. Scope of Alpha generation by fund manager because of interest rate movement is not much and hence Fund will under perform badly in years to come.

Investors should exit the fund if the tax liability is Zero or minimal.

Pros

Good Fund Manager
Good Fund House
Excellent Fund Size

Cons

High Expense Ratio
Above Average Performance
High Risk

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