Dynamic bond schemes are dynamic in nature, just as their name suggests. They are dynamic in their composition and maturity profile. The core objective of this bond is to offer 'optimal' return in both the rising and falling market scenarios. It depends entirely on the fund manager's decisions and management of the portfolio.

Get a better perspective of the best dynamic bond funds in 2025 in the market through the table below.

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List of Dynamic Bond Mutual Funds in India

Fund Name	Category	Risk	NAV	Expense Ratio	1Y Returns	3Y Returns	5Y Returns	7Y Returns	10Y Returns	Rating	Fund Size (in Cr)	Exit Load
ICICI Prudential All Seasons Bond Fund	Debt	Moderately High	42.06	0.63	5.2%	7.8%	7.1%	8.0%	8.6%	2	?13,745	Exit load of 0.25% if redeemed within 1 month
Nippon India Dynamic Bond Fund	Debt	Moderate	42.10	0.35	4.5%	7.5%	6.3%	6.8%	7.2%	4	?3,908	-
SBI Dynamic Bond Direct Plan-Growth	Debt	Moderate	40.93	0.62	4.7%	7.3%	6.8%	7.3%	7.9%	4	?3,770	For units in excess of 10% of the investment, 0.25% will be charged for redemption within 1 month See more
UTI Dynamic Bond Fund	Debt	Moderate	35.25	1.12	4.3%	7.4%	9.5%	8.2%	7.3%	4	?410	-
360 ONE Dynamic Bond Fund	Debt	Moderately High	25.24	0.34	5.3%	8.0%	7.0%	7.3%	7.3%	5	?579	-
ICICI Prudential Retirement Fund	Debt	Moderately High	17.05	1.22	4.3%	6.9%	6.1%	7.2%	--	2	?81	-
Aditya Birla Sun Life Debt Plus Arbitrage FOF Fund	Debt	Moderate	NA	-	8.0%	7.6%	6.4%	--	--	4	?1,238	-
Kotak Dynamic Bond Fund	Debt	Moderately High	42.78	0.59	4.9%	7.7%	6.6%	7.3%	8.1%	3	?2,376	-
Mirae Asset Dynamic Bond Fund	Debt	Low to Moderate	18.71	0.15	5.7%	7.3%	5.9%	6.8%	--	5	?116	-
Kotak Income Plus Arbitrage FOF Fund	Debt	Moderate	NA	-	8.0%	--	--	--	--	--	?5,085	-
Aditya Birla Sun Life Dynamic Bond Retail Fund	Debt	Moderately High	52.31	0.65	4.9%	7.7%	7.3%	6.6%	6.7%	1	?1,458	Exit load of 0.50% if units in excess of 15% are redeemed or switched-out within 90 days See more
Groww Dynamic Term Fund	Debt	Moderate	1,561.89	0.55	2.5%	5.7%	5.2%	5.6%	--	2	?37	-
Bandhan Dynamic Bond Fund	Debt	Moderate	39.70	0.81	6.1%	7.4%	6.2%	7.2%	7.8%	2	?2,025	-
HDFC Dynamic Debt Fund	Debt	Moderate	102.13	0.75	3.4%	6.8%	7.0%	7.1%	6.7%	2	?526	-
DSP Strategic Bond Direct Plan-Growth	Debt	Moderate	3,665.38	0.53	2.3%	6.6%	6.0%	7.6%	7.2%	2	?689	-
View All

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Best Dynamic Bond Mutual Funds

Who Should Invest in Dynamic Bond Mutual Funds?

Dynamic bond funds are likely to be suitable for:

New Investors

The dynamic bond funds are appropriate for investors who are not specialists at predicting interest rate movements.

Investors with Moderate Risk Appetite

These funds can match investors with a moderate risk appetite since they are not as volatile as equity funds and not as safe as debt assets.

Investors with Medium Investment Horizon

These funds are known to perform well over a period of 3 - 5 years. Therefore, these funds may work just right for you if you can stay invested for this period.

Factors to Consider While Investing in Dynamic Bond Funds

The major factors that are to be considered before you can start investing in these funds are:

Historical Performance: Before investing, it is critical to research a fund's past performance. Especially in the case of dynamic bond funds, you will have to note the performance of the fund in the last five years.
Modified Duration: While investing in dynamic bond funds, you must consider the modified duration often. If the modified duration of the fund aligns with your horizon, you can go ahead. Therefore, always look to see if the modified horizon matches your investment horizon.
Performance During Market Movements: You will also have to study how efficiently the fund was managed during a downside risk phase, where the interest rates were shooting up. It enables you to understand how the outcome would be in future circumstances.

Major Advantages

Here are some major advantages of investing in the top dynamic mutual funds –

No mandate for fixed investments: Dynamic funds are not tied down with investment mandates. Therefore, they can invest in different market instruments according to market movements.

Two in one: As mentioned before, dynamic funds can switch between different asset classes per market trends and more flexibly than hybrid funds. This particular fund type adjusts the equity portion’s volatility with debt instruments’ security.

Active risk management: Portfolio managers of the best dynamic mutual funds optimize the investment allocation actively, keeping the market trends and unitholders’ interests in mind.

Higher returns: Dynamic funds tend to offer greater returns than pure debt schemes and some other types of hybrid MFs. It makes them suitable for investors seeking to improve their portfolio’s reward quotient without assuming the high risk involved in equity funds or stocks.

Mode of investments: You can invest in a dynamic fund either in a lump sum or via SIP. The former option lets you invest the entire sum at once. SIP or systematic investment plan allows you to purchase units of a dynamic fund at regular intervals, which can be monthly, quarterly, or half-yearly.

Best dynamic mutual funds stay in tandem with market fluctuations, ensuring a better and balanced return over time.

Risks Involved While Investing in Dynamic Bond Funds

While finding the top dynamic bond funds for your portfolio, major risks to be taken care of are-

Interest Rate Risk: Interest rate risk exists in dynamic bond funds. The portfolio of the fund is adjusted in response to changes in interest rates. Any incorrect call might have a negative impact on fund returns.
Macroeconomic Factors: Macroeconomic factors like government policies, currency fluctuations, and more can affect the interest rate movement and thereby affect the performance of the dynamic bond funds.
Unknown Trends of the Market: The period of interest rate trends may be unknown to the portfolio managers of the fund house because of a lack of clarity in the market; the fund's performance could possibly be affected. The fund could have a higher credit risk in these conditions, and longer maturity periods can make them volatile.

FAQs

Q1. What is meant by a dynamic mutual fund?

Dynamic bond funds come from the debt fund schemes category, where the fund manager has the flexibility to choose the duration of the portfolio. So, in case the manager estimates the interest rates to rise, they can increase the investments to short-tenure debt securities as they are least affected by interest rate risks.

Q2. What is a better choice, FD or a dynamic bond fund?

Dynamic bond funds change the portfolio maturity based on the interest rate scenario, whereas the FD maturity date is always fixed. This is the major difference between these investment vehicles, leaving the end choice to the investor's financial goals.

Q3. What are the risks of a dynamic bond fund?

The primary risk that is faced by the investors of a dynamic fund is the faulty judgment of the fund manager. The tenure strategy could ensure good returns, provided you keep altering the portfolio based on the rate changes in the market.

Q4. Who should invest in dynamic funds?

Dynamic mutual funds are a good choice for investors who want to generate returns from bond investments irrespective of the interest rates.

Q5. What is the investment duration of a dynamic bond fund?

There is no fixed duration for a dynamic fund; the duration of the portfolio is decided by the fund manager based on the interest rate risks of the market.

Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.

Let's have a closer look

Now let us jump and check about these top 15 mutual fund schemes.

ICICI Prudential All Seasons Bond Fund Direct Plan Growth

Fund Performance: The ICICI Prudential All Seasons Bond Fund has given 7.82% annualized returns in the past three years and 7.14% in the last 5 years. The ICICI Prudential All Seasons Bond Fund comes under the Debt category of ICICI Prudential Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential All Seasons Bond Fund via lump sum is ?5,000 and via SIP is ?100.

Min Investment Amt	?5,000
AUM	?13,745Cr
1Y Returns	5.2%

Nippon India Dynamic Bond Fund Direct Growth

Fund Performance: The Nippon India Dynamic Bond Fund has given 7.45% annualized returns in the past three years and 6.34% in the last 5 years. The Nippon India Dynamic Bond Fund comes under the Debt category of Nippon India Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Nippon India Dynamic Bond Fund via lump sum is ?5,000 and via SIP is ?100.

Min Investment Amt	?5,000
AUM	?3,908Cr
1Y Returns	4.5%

SBI Dynamic Bond Direct Plan Growth

Fund Performance: The SBI Dynamic Bond Direct Plan-Growth has given 7.34% annualized returns in the past three years and 6.77% in the last 5 years. The SBI Dynamic Bond Direct Plan-Growth comes under the Debt category of SBI Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in SBI Dynamic Bond Direct Plan-Growth via lump sum is ?5,000 and via SIP is ?500.

Min Investment Amt	?5,000
AUM	?3,770Cr
1Y Returns	4.7%

UTI Dynamic Bond Fund Direct Growth

Fund Performance: The UTI Dynamic Bond Fund has given 7.42% annualized returns in the past three years and 9.53% in the last 5 years. The UTI Dynamic Bond Fund comes under the Debt category of UTI Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in UTI Dynamic Bond Fund via lump sum is ?500 and via SIP is ?500.

Min Investment Amt	?500
AUM	?410Cr
1Y Returns	4.3%

360 ONE Dynamic Bond Fund Direct Growth

Fund Performance: The 360 ONE Dynamic Bond Fund has given 8.03% annualized returns in the past three years and 7.02% in the last 5 years. The 360 ONE Dynamic Bond Fund comes under the Debt category of IIFL Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in 360 ONE Dynamic Bond Fund via lump sum is ?10,000 and via SIP is ?1,000.

Min Investment Amt	?10,000
AUM	?579Cr
1Y Returns	5.3%

ICICI Prudential Retirement Fund Pure Debt Plan Direct Growth

Fund Performance: The ICICI Prudential Retirement Fund has given 6.92% annualized returns in the past three years and 6.09% in the last 5 years. The ICICI Prudential Retirement Fund comes under the Debt category of ICICI Prudential Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in ICICI Prudential Retirement Fund via lump sum is ?5,000 and via SIP is ?100.

Min Investment Amt	?5,000
AUM	?81Cr
1Y Returns	4.3%

Aditya Birla Sun Life Debt Plus Arbitrage FOF Direct Growth

Fund Performance: The Aditya Birla Sun Life Debt Plus Arbitrage FOF Fund has given 7.58% annualized returns in the past three years and 6.42% in the last 5 years. The Aditya Birla Sun Life Debt Plus Arbitrage FOF Fund comes under the Debt category of Aditya Birla Sun Life Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Aditya Birla Sun Life Debt Plus Arbitrage FOF Fund via lump sum is ?100 and via SIP is ?1,000.

Min Investment Amt	?100
AUM	?1,238Cr
1Y Returns	8.0%

Kotak Dynamic Bond Fund Direct Growth

Fund Performance: The Kotak Dynamic Bond Fund has given 7.69% annualized returns in the past three years and 6.63% in the last 5 years. The Kotak Dynamic Bond Fund comes under the Debt category of Kotak Mahindra Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Kotak Dynamic Bond Fund via lump sum is ?100 and via SIP is ?100.

Min Investment Amt	?100
AUM	?2,376Cr
1Y Returns	4.9%

Mirae Asset Dynamic Bond Fund Direct Growth

Fund Performance: The Mirae Asset Dynamic Bond Fund has given 7.26% annualized returns in the past three years and 5.94% in the last 5 years. The Mirae Asset Dynamic Bond Fund comes under the Debt category of Mirae Asset Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Mirae Asset Dynamic Bond Fund via lump sum is ?5,000 and via SIP is ?99.

Min Investment Amt	?5,000
AUM	?116Cr
1Y Returns	5.7%

Kotak Income Plus Arbitrage FOF Direct Growth

Fund Performance: The Kotak Income Plus Arbitrage FOF Fund comes under the Debt category of Kotak Mahindra Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Kotak Income Plus Arbitrage FOF Fund via lump sum is ?100 and via SIP is ?100.

Min Investment Amt	?100
AUM	?5,085Cr
1Y Returns	8.0%

Aditya Birla Sun Life Dynamic Bond Retail Fund Direct Growth

Fund Performance: The Aditya Birla Sun Life Dynamic Bond Retail Fund has given 7.7% annualized returns in the past three years and 7.33% in the last 5 years. The Aditya Birla Sun Life Dynamic Bond Retail Fund comes under the Debt category of Aditya Birla Sun Life Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Aditya Birla Sun Life Dynamic Bond Retail Fund via lump sum is ?1,000 and via SIP is ?1,000.

Min Investment Amt	?1,000
AUM	?1,458Cr
1Y Returns	4.9%

Groww Dynamic Term Fund Direct Growth

Fund Performance: The Groww Dynamic Term Fund has given 5.66% annualized returns in the past three years and 5.18% in the last 5 years. The Groww Dynamic Term Fund comes under the Debt category of Groww Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Groww Dynamic Term Fund via lump sum is ?500 and via SIP is ?500.

Min Investment Amt	?500
AUM	?37Cr
1Y Returns	2.5%

Bandhan Dynamic Bond Fund Direct Growth

Fund Performance: The Bandhan Dynamic Bond Fund has given 7.44% annualized returns in the past three years and 6.22% in the last 5 years. The Bandhan Dynamic Bond Fund comes under the Debt category of IDFC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in Bandhan Dynamic Bond Fund via lump sum is ?1,000 and via SIP is ?100.

Min Investment Amt	?1,000
AUM	?2,025Cr
1Y Returns	6.1%

HDFC Dynamic Debt Fund Direct Plan Growth

Fund Performance: The HDFC Dynamic Debt Fund has given 6.8% annualized returns in the past three years and 7.01% in the last 5 years. The HDFC Dynamic Debt Fund comes under the Debt category of HDFC Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in HDFC Dynamic Debt Fund via lump sum is ?100 and via SIP is ?100.

Min Investment Amt	?100
AUM	?526Cr
1Y Returns	3.4%

DSP Strategic Bond Direct Plan Growth

Fund Performance: The DSP Strategic Bond Direct Plan-Growth has given 6.56% annualized returns in the past three years and 6.01% in the last 5 years. The DSP Strategic Bond Direct Plan-Growth comes under the Debt category of DSP Mutual Funds.

Minimum Investment Amount: The minimum amount required to invest in DSP Strategic Bond Direct Plan-Growth via lump sum is ?100 and via SIP is ?100.