SBI Dynamic Bond fund follows a disciplined and risk conscious investment process. The fund is driven by a flexible mandate to move across the segment with an active-duration strategy. It employs a bottom-up investment approach combined with a top-down overlay to generate superior risk adjusted returns.

A top-down approach guides portfolio position around the predetermined risk parameters by assessing gross domestic product/inflation, monetary/fiscal policy, interest rate, liquidity, yield curve and credit spread and so on, while the intensive bottom-up credit research uses an in house model for security selection. They use various qualitative and quantitative parameters and emphasise the company's management, business and financial health.

They also use the analysis of sell-side research and credit rating agencies to form a view on the credit worthiness of companies, but to a limited extent. The credit committee then reviews the rated securities and the approved securities are assigned credit and tenor limit. The investment universe comprises 320 companies. While constructing the portfolio, the managers have the flexibility to implement the trades with reasonable leeway to express their views.

The risk-management team also periodically reviews the portfolio to ensure that the managers adhere to the guidelines. The portfolio is constructed purely based on the instrument's liquidity. Credit bets are avoided. It primarily invests in government securities, state development loans, public sector undertaking AAA bonds and a few non-banking financial companies with quality names.

Dinesh Ahuja, lead portfolio manager of SBI Dynamic Bond fund, has been managing the fund since February 2011 and has a total experience of over 20 years, with 13 years of experience in fixed-income fund management. 

The team's understanding of the markets and frequent interaction with its equity team and parent company gives it an edge in forming views on the business and credit worthiness of the companies.