“Over the past couple of months, the US Fed has turned more aggressive in its interest rate outlook, driving rates up globally. Inflation in India has run ahead of expectations. Events in Saudi Arabia have driven crude prices up, which feeds into inflation. And finally, credit growth has begun to pick up, and we’ve already seen State Bank of India hike bulk deposit rates,” says Kunal Bajaj, founder and chief executive officer, Clearfunds.com. “Of your total debt fund portfolio, not more than 20-25 per cent should be allocated in this aggressive category. Also, have a horizon of three-five years for investments in dynamic funds to allow the fund manager to navigate such volatile periods,” says Bajaj.