1. Since these funds play on the price appreciation or fall of the same, they are suitable for investment only when there is a probability of a quick change in the interest rate scenario, either on the upside or on the downside.
2. When the interest rate scenario is stable, these funds would perform in line with other duration funds.
3. Dynamic bond funds also play on the probable changes in ratings of debt instruments.
4. Investors can, therefore, also look at these funds when, due to a change in the economic cycle, there is a possibility of ratings upgrade of some companies, and hence debt instruments issued by such companies.