IDFC Dynamic Bond Fund
- Category: Dynamic Bond
- Fund Manager: Suyash Choudhary
- Star Rating: 4 stars
- Analyst Rating: Silver
- Credit Quality: High
- Interest Rate Sensitivity: Limited
- What you need to know: The fund’s recent underperformance is not a reflection on its prospects
- SEBI re-categorization: No change
IDFC Dynamic Bond Fund’s advantages include the tenacity of its competent lead manager Suyash Choudhary and a strong process that draws on the firm's robust macroeconomic and fundamental research. It is these elements that makes it tough not to have conviction in this fund despite its recent underperformance.
Its core philosophy of dynamically tracking interest rate movements remains intact.
The fund has blossomed under the stewardship of Choudhary, who took the helm in October 2010.
He is a seasoned manager in managing duration strategies. His strength lies in his in-depth understanding of the macroeconomic environment, ability to anticipate interest-rate movements, and ability to identify attractive investment opportunities across market segments. He is at his best investing in an unconstrained manner.
The fund’s investment strategy complements Choudhary’s investment style. The manager seeks to add value by taking active duration calls rather than credit bets. He therefore plies a fluid investment approach that allows him to invest across the yield curve and segments—government securities, corporate bonds, and money market instruments. Also, he doesn’t shy away from taking contrarian calls if he believes the risk/reward is favourable.
The strategy is not without risk. For instance, the strategy of freely moving across the yield curve and penchant for taking contra calls may not always work. The fund’s underperformance in 2015 is a case in point. Likewise, Choudhary’s fundamental-driven and long-term approach did not yield the desired results last year as the market reacted differently from the way it should have fundamentally behaved.
Still, Choudhary is at home with his investment style. He adopts a relatively long-term approach to investing and, in the process, braces himself for short-term underperformance. We draw confidence from his presence at the helm and believe that his skills and research-driven approach should hold the fund in good stead going ahead. This is a solid option to effectively navigate interest-rate volatility.
