PGIM India Mutual Fund on Monday (March 26) launched Retirement Fund, an open-ended solution-oriented scheme with a five-year lock-in period. The new fund offer (NFO) of the scheme is available till April 9, 2024.
The primary objective of the PGIM India Retirement Fund is to provide investors with a mix of securities, including equity, equity-related instruments, REITs, InvITs, and fixed-income securities.
This approach aims to balance risk and return potential, aligning with investors' retirement objectives.
However, it's essential to note that while the scheme endeavours to meet its investment objective, there is no guaranteed return, PGIM India Mutual Fund said.
With a diversified portfolio expected to allocate a minimum of 25% towards large-cap, mid-cap, and small-cap segments, the fund aims to capture opportunities across different market segments.
The fund management approach combines both bottom-up and top-down strategies.
Fund managers will prioritise companies with stable or high growth potential, assessing factors such as management quality, financial condition, valuation metrics, and corporate governance practices, the fund house said.
Furthermore, the scheme may also explore investments in turn-around companies based on the fund manager's outlook, subject to regulatory limits for stock and sector weightages.
This flexibility in investment strategy allows for adaptation to evolving market conditions while maintaining a focus on long-term wealth creation.
In terms of investment eligibility, the PGIM India Retirement Fund requires a minimum subscription amount of ₹5,000, with subsequent investments in multiples of ₹1.
A look at returns of similar funds
| Fund Name | 3-year return | 5-year return |
|---|
| ICICI Prudential Retirement Fund - Pure Equity Plan - Direct Plan - Growth | 25.77% | 22.40% |
| ICICI Prudential Retirement Fund - Hybrid Aggressive Plan - Direct Plan - Growth | 21.84% | 17.70% |
| Axis Retirement Savings Fund - Dynamic Plan - Direct Plan - Growth | 14.86% | - |
| Tata Retirement Savings Fund - Direct Plan - Progressive Plan - Growth | 16.97% | 15.43% |
| Union Retirement Fund - Direct Plan - Growth | - | - |
| Tata Retirement Savings Fund - Direct Plan - Moderate Plan - Growth | 15.35% | 14.18% |
| Axis Retirement Savings Fund - Aggressive Plan - Direct Plan - Growth | 12.89% | - |
(Source: Moneycontrol)
Investment considerations
While the PGIM India Retirement Fund presents an opportunity for investors seeking a structured approach to retirement planning, it's crucial to conduct thorough due diligence and consult with financial advisors to determine suitability based on individual financial circumstances.
Here are some points to consider when evaluating the suitability of retirement funds for investment:
Long-term financial goals
Retirement funds are specifically designed to help individuals save for their retirement years.
So, if the financial goal includes building a nest egg for retirement, investing in retirement funds can be a suitable option.
Diversification
Retirement funds typically offer diversified investment portfolios, which may include a mix of equities, bonds, and other assets.
Diversification helps spread risk and may provide more stable returns over the long term.
Lock-in periods
Some retirement funds may come with lock-in periods, during which investors cannot withdraw their funds without penalties.
While this may limit liquidity, it also encourages long-term investing and helps prevent investors from making impulsive decisions during market downturns.
Risk consideration
Like any investment, retirement funds carry inherent risks, including market risk, interest rate risk, and credit risk.
Investors should assess their risk tolerance and understand the risks associated with different types of retirement funds before investing.
