Purpose of Dynamic Mutual Funds
Dynamic Mutual Funds serve several purposes:
1. Risk Management: One of the objectives of funds is to manage risk effectively. These funds aim to protect investors from losses during market downturns by adjusting the allocation of assets based on market conditions.
2. Optimising Returns: Dynamic funds strive to capitalise on market opportunities and maximise returns. They achieve this by being flexible and adapting to changes, in the market which can potentially result in returns compared to asset allocation strategies.
3. Diversification: These funds offer investors a portfolio across asset classes allowing them to benefit from the potential returns of each asset class while spreading out their risk.
4. Active Management: Dynamic funds are actively managed, meaning that fund managers make real time decisions to take advantage of market trends and opportunities. This active management approach can lead to returns in volatile markets.
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