homepersonal finance NewsBandhan Retirement Fund opens for subscription — should you invest in this NFO?
Bandhan Retirement Fund opens for subscription — should you invest in this NFO?
Bandhan Retirement Fund benchmarks its performance against the CRISIL Hybrid 50+50 – Moderate Index. The scheme opened for public subscription on September 28, 2023, and will close on October 12, 2023. The scheme re-opens for ongoing subscription and redemption within five business days from the date of allotment of units.
Bandhan Retirement Fund, an offering from Bandhan Mutual Fund, has opened for subscription on Thursday, September 28. This New Fund Offer (NFO) is an open-ended retirement solution-oriented scheme. Its primary objective is to provide long-term capital appreciation and income by investing in a diversified mix of equity, debt, and other instruments. The same will be available until October 12, 2023.
The blend of asset classes in the mentioned NFO is designed to help investors achieve their retirement goals. However, it's important to note that while the scheme strives to meet this objective, there is no absolute guarantee of returns in any investment, the fund house said in a statement.
Benchmark
The scheme benchmarks its performance against the CRISIL Hybrid 50+50 – Moderate Index. This index, a blend of S&P BSE 200 (50 percent) and the CRISIL Composite Bond Fund Index (50 percent), mirrors the Bandhan Retirement Fund's balanced approach to asset allocation.
The equity investment framework of Bandhan Retirement Fund focuses on companies with a long-term growth trajectory and justified valuations. The minimum equity holding requirement of 65 percent is to be maintained with investment in hedged equity allocation to ensure that equity taxation eligibility is met. The debt portfolio is diversified across quality instruments like GSec, SDL, Corporate Bonds, and Money Market Instruments, the fund house said.
Plans options
The scheme offers two plan options: Regular Plan and Direct Plan. Both plans have separate Net Asset Values (NAVs) and provide investors with the choice between Income Distribution cum Capital Withdrawal Option (IDCW) and growth option.
The IDCW Option under both plans further offers payout of IDCW and transfer of IDCW plan.
Minimum investment
During the New Fund Offer, investors can start with a minimum application amount of Rs 1,000 and in multiples of Re 1 thereafter. For those looking to invest systematically, the Systematic Investment Plan (SIP) option starts at Rs 100 and can be increased in multiples of Re 1.
Lock-in-period
One distinctive feature of the Bandhan Retirement Fund is the lock-in period. Investors' units will be locked in for a duration of 5 years or until they reach their retirement age, whichever comes first. This measure ensures a disciplined approach to retirement planning, and it's worth noting that units cannot be assigned, transferred, pledged, redeemed, or switched out during this lock-in period. However, after the lock-in period concludes, subsequent switches within the scheme will not be subject to further lock-in, the fund house said.
Load structure
There are no entry loads or exit loads, making it easier for investors to manage their investments without incurring additional charges.
Fund managers
The scheme will be managed by Viraj Kulkarni who will oversee the equity portion, while Gautam Kaul will manage the debt portion. Nishita Shah will handle the overseas investment portion of the scheme.
Asset allocation
Under normal circumstances, the asset allocation of the scheme will be as follows:
| Instruments | Indicative allocations (% of total assets) | Risk Profile | |
| Minimum | Maximum | ||
| Equity and Equity-related Instruments | 50% | 100% | Very High |
| Debt Securities and Money MarketInstruments (including Governmentsecurities, Securitised debt) | 0% | 50% | Low to Moderate |
| Units issued by REITs & InvITs | 0% | 10% | Very High |
(Source: Fund document)
Importance of retirement planning
Vishal Kapoor, CEO of Bandhan AMC Limited, emphasises the importance of retirement planning in today's world. With rising life expectancy, increasing living costs, and healthcare inflation, investors need a solid plan for their retirement years. He notes that traditional conservative approaches to retirement planning often struggle to beat inflation, potentially leaving retirees with insufficient funds to maintain their standard of living.
Comparison with other retirement funds
Bandhan Retirement Fund joins a league of retirement-focused mutual funds offered by various asset management companies in India. Some of these include TATA Mutual Fund's Tata Retirement Savings Fund, SBI Mutual Fund's SBI Retirement Benefit Fund, Nippon Mutual Fund's Nippon India Retirement Fund - Income Generation Scheme, and several others.
Here's a look at the returns of some of the retirement funds:
| Scheme Name | 3-year | 5-year | 10-year |
| Aditya Birla Sun Life Retirement Fund - The 50s Plus - Debt Plan - Direct - Growth Retirement Fund | 4.22% | - | - |
| Axis Retirement Savings Fund - Conservative Plan - Direct Plan - Growth Retirement Fund | 10.65% | - | - |
| Axis Retirement Savings Fund - Aggressive Plan - Direct Plan - Growth Retirement Fund | 14.85% | - | - |
| ICICI Prudential Retirement Fund - Pure Debt Plan - Direct Plan - Growth Retirement Fund | 5.62% | - | - |
| Tata Retirement Savings Fund - Direct Plan - Conservative Plan - Growth Retirement Fund | 8.49% | 8.85% | 10.42% |
| UTI Retirement Benefit Pension Fund - Direct Plan Retirement Fund | 15.99% | 9.83% | 11.00% |
| HDFC Retirement Savings Fund - Hybrid-Debt Plan - Direct Plan- Growth Retirement Fund | 10.25% | 9.34% | - |
(Source: Moneycontrol)
Investment considerations
The Bandhan Retirement Fund stands as a solution for investors seeking to secure their financial future during retirement. However, it's essential for investors to carefully consider their financial goals and risk tolerance before investing in any mutual fund, including the Bandhan Retirement Fund. Consulting a financial advisor is often a prudent step to ensure that the investment aligns with the retirement aspirations, experts say.
First Published: Sept 28, 2023 3:07 PM IST
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