A dynamic bond fund which relies more on duration calls than credit risk to generate alpha, DSP Blackrock Strategic Bond Fund has managed a three- to four-star rating mainly through good performance during the adverse turns in debt markets. With a controlled approach to dynamic portfolio management, this fund does not take outsized risks. So far, the fund's portfolio has avoided credit risk by owning only G-secs or AAA-rated corporate bonds. The fund's average maturity in the past was moderate, but has been lengthened of late to about ten years to make the most of the fall in rates as the fund believes that monetary transmission in the coming months will lead to price gains.
The fund has managed middle-of-the-road returns over one, three and five years compared to its peers, mainly due to its conservative approach. The strategy helped contain losses very well during the bond market shock of 2013 and may well continue to contain volatility in the future as well.
The fund's regular plan expense ratio, at 1.07 per cent, isn't high within the category, but the direct plan, with an average six-monthly expense ratio of 0.77 per cent, has fared much better than the regular plan nevertheless. This has led to the direct plan enjoying a four-star rating, while the regular plan is at three stars.
This fund provides a good option if you're wary of credit risk.
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