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Best Retirement Mutual Fund
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List of Retirement Mutual Funds in 2024
Top 10 Retirement Mutual Funds to invest in 2024
Below are the retirement mutual fund in india:
1. UTI Retirement Fund Direct (G)
UTI Retirement Fund Direct (G) is a Others fund that has delivered a 1 Year return of 19.6%, a 3 Years return of 12.8% and a 5 Years return of 14.0%. The fund has an expense ratio of 1.0% and an AUM of ₹4643 crores as of 2024-11-29.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 39.06% to equities, 57.21% to debt and 3.73% to other assets.
2. Tata Retirement Savings Conservative Direct (G)
Tata Retirement Savings Conservative Direct (G) is a Others fund that has delivered a 1 Year return of 13.8%, a 3 Years return of 8.7% and a 5 Years return of 9.4%. The fund has an expense ratio of 1.0% and an AUM of ₹174 crores as of 2024-11-29.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 29.17% to equities, 50.37% to debt and 20.46% to other assets.
3. Tata Retirement Savings Moderate Direct (G)
Tata Retirement Savings Moderate Direct (G) is a Others fund that has delivered a 1 Year return of 27.4%, a 3 Years return of 15.8% and a 5 Years return of 16.8%. The fund has an expense ratio of 0.6% and an AUM of ₹2162 crores as of 2024-11-29.The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 79.00% to equities, 8.34% to debt and 12.66% to other assets.
4. Nippon India Retirement Fund - Income Generation Scheme Direct (G)
Nippon India Retirement Fund - Income Generation Scheme Direct (G) is a Others fund that has delivered a 1 Year return of 15.3%, a 3 Years return of 8.6% and a 5 Years return of 9.0%. The fund has an expense ratio of 1.0% and an AUM of ₹160 crores as of 2024-11-29. It was Launched on 2015-02-11. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 19.77% to equities, 75.50% to debt and 4.73% to other assets.
5. Aditya Birla Sun Life Retirement Fund - The 50s Plus - Debt Plan Direct (G)
Aditya Birla Sun Life Retirement Fund - The 50s Plus - Debt Plan Direct (G) is a Others fund that has delivered a 1 Year return of 7.7%, a 3 Years return of 5.1% and a 5 Years return of 5.3%. The fund has an expense ratio of 0.8% and an AUM of ₹15 crores as of 2024-11-29. It was Launched on 2019-03-11. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 095.52% to debt and 4.48% to other assets.
6. Axis Retirement Fund - Dynamic Plan Direct (G)
Axis Retirement Fund - Dynamic Plan Direct (G) is a Others fund that has delivered a 1 Year return of 34.6% and a 3 Years return of 13.5%. The fund has an expense ratio of 1.1% and an AUM of ₹385 crores as of 2024-11-29. It was Launched on 2019-12-20. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 88.63% to equities, 9.87% to debt and 1.50% to other assets.
7. Aditya Birla Sun Life Retirement Fund - The 40s Plan Direct (G)
Aditya Birla Sun Life Retirement Fund - The 40s Plan Direct (G) is a Others fund that has delivered a 1 Year return of 24.0%, a 3 Years return of 12.6% and a 5 Years return of 13.2%. The fund has an expense ratio of 1.0% and an AUM of ₹113 crores as of 2024-11-29. It was Launched on 2019-03-11. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 73.22% to equities, 16.33% to debt and 10.45% to other assets.
8. Aditya Birla Sun Life Retirement Fund - The 50s Plan Direct (G)
Aditya Birla Sun Life Retirement Fund - The 50s Plan Direct (G) is a Others fund that has delivered a 1 Year return of 13.1%, a 3 Years return of 8.1% and a 5 Years return of 7.4%. The fund has an expense ratio of 0.6% and an AUM of ₹26 crores as of 2024-11-29. It was Launched on 2019-03-11. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 24.22% to equities, 68.39% to debt and 7.39% to other assets.
9. Aditya Birla Sun Life Retirement Fund - The 30s Plan Direct (G)
Aditya Birla Sun Life Retirement Fund - The 30s Plan Direct (G) is a Others fund that has delivered a 1 Year return of 30.1%, a 3 Years return of 14.5% and a 5 Years return of 14.8%. The fund has an expense ratio of 1.0% and an AUM of ₹402 crores as of 2024-11-29. It was Launched on 2019-03-11. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 97.16% to equities, 0.31% to debt and 2.53% to other assets.
10. Axis Retirement Fund - Aggressive Plan Direct (G)
Axis Retirement Fund - Aggressive Plan Direct (G) is a Others fund that has delivered a 1 Year return of 29.1% and a 3 Years return of 12.0%. The fund has an expense ratio of 0.9% and an AUM of ₹922 crores as of 2024-11-29. It was Launched on 2019-12-20. The minimum SIP investment is ₹1000 and the minimum lump sum investment is ₹5000. The fund allocates 77.95% to equities, 19.93% to debt and 1.69% to other assets.
What are Retirement Mutual Funds?
A retirement mutual fund is an open-ended retirement solution-oriented scheme that helps save up for retirement. These funds majorly invest in low-risk investments like government securities to ensure a steady income. However, they also invest in equity and debt securities to ensure the investment grows. Retirement mutual funds usually have a lock-in period of 5 years or until retirement, whichever is earlier.
The main purpose of a retirement fund is to ensure steady income after retirement. Moreover, a retirement mutual fund can help accumulate a retirement corpus taking into consideration the growing inflation. Investors can invest in these funds through lumpsum mode or SIP. SIP is the most preferred mode of investing as it helps accumulate wealth by investing in smaller amounts regularly.
Investors can withdraw their investment in a lump sum or opt for a Systematic Withdrawal Plan (SWP) to ensure regular income and liquidity post-retirement.
Recommended: To check best mutual funds to invest
Top 5 Mutual Funds for Retirement 2024
Direct Plan
| Fund Name | 3 Year Returns | 5 Year Returns |
| UTI Retirement Fund Direct (G) | 11.7% | 14.1% |
| Tata Retirement Savings Conservative Direct (G) | 7.8% | 9.2% |
| Tata Retirement Savings Moderate Direct (G) | 13.2% | 16.2% |
| Aditya Birla Sun Life Retirement Fund – The 50s Plan Direct (G) | 7.8% | 7.3% |
| Nippon India Retirement Fund – Income Generation Scheme Direct (G) | 8.1% | 9% |
Regular Plan
| Fund Name | 3 Year Returns | 5 Year Returns |
| SBI Retirement Benefit Fund Regular (G) | 15.2% | NA |
| HDFC Retirement Savings Fund Regular (G) | 19% | 23.6% |
| ICICI Prudential Retirement Fund Regular (G) | 5.2% | 5.8% |
| TATA Retirement Savings Fund Regular (G) | 13.5% | 16% |
| Axis Retirement Savings Fund Regular (G) | 9.2% | NA |
Advantages and Disadvantages of Investing in Retirement Funds
Advantages
- Liquidity: Retirement mutual funds are highly liquid investment options in comparison to traditional retirement schemes. Furthermore, with mutual funds, one can partially withdraw or completely withdraw their investments depending on the lock-in period. Also, if an investor feels that their fund isn’t performing well, they can easily switch between funds. In other words, one can choose a better performing mutual fund and shift their investments to that.
- Transparency: Mutual fund houses are mandated to disclose all the information related to the scheme on a regular basis. Therefore, this helps the investor to track the mutual fund portfolio, its performance, and market value from time to time.
- Payouts: Depending on the investor’s financial requirements, they can opt for either a lump sum or a monthly payout.
- Tax Efficient: Mutual fund investments are comparatively more tax-efficient than pension plans. In the case of pension income, the income is added to the investor’s taxable income, and there is no exception. On the other hand, for equity mutual funds, long term capital gains up to INR 1,00,000 are tax-free. Moreover, in the case of debt mutual funds, investors can benefit from indexation.
- Diversification: Retirement mutual funds offer a good diversification for an investor’s investment portfolio. One can choose the suitable asset allocation based on their goals, return target, and understanding of risk.
Disadvantages
- Tax exemption: Except for Equity Linked Savings Schemes, no other mutual funds qualify for tax exemption under Section 80C of the Income Tax Act, 1961. Therefore, retirement mutual funds are not suitable for investors who are looking for tax exemption under Section 80C of the Income Tax Act, 1961.
- High volatility: Equity mutual funds are highly volatile investment options. Therefore, investors who do not understand and are unwilling to undertake such high volatility should stay away from mutual funds. Traditional retirement schemes are suitable for such investors who are looking for stable and fixed income.
Who should Invest in Retirement Mutual Funds?
Retirement funds are suitable for investors who want to save up for their sunset years (post-retirement). Investors in their early 20s can also invest in these funds, and hence there is no bar on the minimum age requirement for investing in them. Moreover, retirement funds invest in low-risk investments and best suit investors with a low to a medium understanding of risk. Finally, investors who do not have the time and knowledge to make their DIY equity portfolio for their retirement can also invest in these funds.
Things To Consider Before Investing in Retirement Funds
Following are the things to consider before investing in retirement mutual funds:
Investment Goals
Associating investments to financial goals like retirement planning, will not only keep the investors disciplined but also motivated. Also, it is important that investors align their goals with the mutual fund’s investment objective. Hence, one should carefully pick the funds that best suit their investment needs.
Investment Duration
Long term investments are best suited for retirement planning. Therefore, one should consider investing in mutual funds for at least a period of five years. For a long duration, equity mutual funds have given significant returns in the past. However, as equity mutual funds are highly volatile, one must not worry about short term fluctuations. One should have longer investment tenure to be able to earn significant returns.
Returns
Unlike most traditional retirement schemes, mutual funds do not guarantee returns. However, longer investment durations will help investors in generating significant returns. Historically, equity mutual funds have generated higher returns in comparison to traditional investment schemes. Therefore, one should be patient and should not worry about short term market movements.
Risk
Mutual funds invest across debt and equity instruments. Depending on the equity and debt exposure, the volatility of the fund can be determined. Therefore, one should carefully analyse the portfolio exposure of a fund before investing in them.
Financial Ratios
There are many ratios one can use to evaluate mutual funds. However, the following are a few of the key financial ratios that help in evaluating a retirement mutual fund:
Alpha
It is the measure of performance of a mutual fund against its benchmark. A positive alpha indicates the fund has outperformed the benchmark by the said percentage.
Standard deviation
Standard deviation measures how much the return of a mutual fund deviates from its average. In other words, it measures volatility or risk in the fund. The higher the standard deviation, the more volatile the fund’s returns, hence raising the risk involved.
Beta
Beta is a measure of the sensitivity of a mutual fund when compared to the benchmark. It measures how the fund’s return changes when the market rises or falls. If the beta is less than one, the fund is less sensitive to the market movements. Whereas, if the beta is more than one, the fund is highly sensitive to market movements. However, if the beta is one, then the fund and market movements are in sync.
Portfolio turnover ratio
The portfolio turnover ratio measures the trading activity of a fund. In other words, it means the rate at which the securities are bought and sold in a mutual fund. A high turnover ratio indicates high transaction costs and high capital gains taxes. Hence a mutual fund is considered desirable when the turnover ratio is low.
Sharpe Ratio
It measures the performance of the fund in light of risks taken. In other words, investors can determine whether the returns from the fund are due to the risks undertaken or the investment choice of the fund manager. A high Sharpe ratio is considered good and indicates the fund has high risk-adjusted returns.
R-squared
It measures the relationship between the portfolio of the mutual fund and the benchmark. A high value indicates that the portfolio’s performance is in sync with its benchmark. Whereas a low R-squared indicates changes in the benchmark doesn’t affect the portfolio much.
Explore Standard Deviation in Mutual Funds
Cost
Mutual funds have certain costs associated with them, and the same is charged in the form of the expense ratio and exit load. The expense ratio includes fund management costs, marketing and distribution costs, transaction costs, etc. This is charged from the investors through NAV, hence reducing the profits for the investors. Whereas exit load is the charge the fund house cuts if the investor exits the fund before the stipulated time period. Investors have to ensure that the expense ratio isn’t too high and compare a fund’s returns with other funds after factoring in the costs.
Taxation of Retirement Funds
Tax saving is one of the most important goals for all individuals who earn. Clubbing tax saving with investing will serve the purpose of saving tax as well as investing. However, investors also have to be cautious while redeeming their investments as returns from these investments are taxable. Hence investors have to invest in tax-efficient investments in case they want to save their retirement corpus. For example, an equity fund charges 10% tax on long term capital gains above INR one lakh. Whereas a debt fund charges 20% with indexation benefit on capital gains. Hence, investors have to keep the tax implications of retirement funds in mind before investing in retirement funds.