Want to benefit from downturn in interest rates? Go for a dynamic bond fund

Investors who don't want to take interest-rate risk may avoid these funds

After the Reserve Bank of India (RBI) paused its rate hike cycle in April, many investors are trying to figure out whether it could hike the repo rate again, begin to cut it soon, or keep it at a high level for a long time. While they want to benefit from a downturn in interest rates, they are not sure whether this is the right time to enter longer-duration funds. Such investors should consider investing in a dynamic bond fund, a category that currently has 25 funds with total assets under management of Rs 31,835 crore.

How do they work?