The mutual fund has launched a retirement fund NFO and is currently accepting applications. This severance package has a fixed period of 5 years. Investors often wonder whether to choose a simple mutual fund or a solution-based retirement fund for their retirement planning.Why not consider investing in PGIM Retirement Fund NFO• Additionally, what alternative investment vehicles exist for retirement planning?
Also read: 15 Most Recommended Mutual Funds for 2024
PGIM Retirement Fund NFO Issue Details
Details of the NFO issue are as follows:
| Fund name | PGIM India Retirement Fund |
| NFO is open | March 26, 24 |
| NFO closing | April 9, 24 |
| Scheme re-opened for continued purchase/sale | Within 5 business days |
| Minimum application amount | 5,000 rupees, thereafter in multiples of 1 rupee |
| Minimum SIP | 1,000 yen for 5 months |
| Fund NAV | 10 rupees during NFO period. |
| entry road | Nothing |
| End of loading | Nothing |
| danger | very high risk |
| standard | S&P BSE 500 Index TRI |
| fund manager | Vinay Paharia |
PGIM Retirement Fund NFO – What is the investment objective?
PGIM India Retirement Fund is an unlimited retirement solutions oriented scheme with a fixed period of 5 years or till retirement age (whichever is earlier).
The scheme’s investment objective is to provide capital appreciation and returns in line with investors’ retirement objectives by investing in a mix of securities comprising shares, equity-related products, REITs and InvITs, and bonds.
However, there is no guarantee that the investment objective of this plan will be achieved. This scheme does not guarantee/suggest returns.
What is the allocation pattern of this mutual fund scheme?
The investment pattern of this fund is as follows.
| Type of instrument | minimum% | maximum% | risk profile |
|---|---|---|---|
| Stocks and stock-related products | 75% | 100% | very expensive |
| Debt securities and money markets Financial products containing cash, Triparty Repo and mutual fund equivalents and units. |
0% | twenty five% | low to medium |
| Units issued by REITs and InVITs | 0% | Ten% | Medium to high |
Why should you invest in PGIM Retirement Fund NFO?
This retirement benefit has a fixed term of 5 years or until your retirement age, whichever is earlier. This helps investors invest in such funds for medium to long term.
PGIM Retirement Fund NFO – Risk or Negative Factors
You should consider some of these risk factors/negative factors before investing.
This retirement benefit has a fixed term of 5 years or until your retirement age, whichever is earlier. It is good that the investment is locked and such investment grows, but you cannot withdraw the investment in case of emergency.
The fund invests between 65% and 100% in stocks, which is risky.
The Fund invests in fixed income instruments that are subject to interest rate risk, reinvestment risk, liquidity risk and default risk.
The fund also invests in REITs and InvITs, which are considered riskier assets.
Please refer to the mutual fund scheme’s SID/KIM/prospectus for complete risk factors.
PGIM Emerging Markets Fund Worst performing mutual funds in the past 10 years It generated a return of 1% per year.
How is the performance of your existing retirement funds?
Existing retirement funds have returned between 5% and 22% over the past five years. The performance regarding the scheme is as follows:
| scheme name | 3 years | 5 years | 10 years |
|---|---|---|---|
| ICICI Prudential Retirement Fund – Pure Equity Plan | 29% | twenty two% | – |
| HDFC Retirement Savings Fund – Equity Plan Plan | 27% | twenty two% | – |
| ICICI Prudential Retirement Fund – Hybrid Aggressive Plan | twenty one% | 18% | – |
| HDFC Retirement Savings Fund – Hybrid Equity Plan | 18% | 17% | – |
| Tata Retirement Savings Fund Progressive Plan | 16% | 15% | 18% |
| Japan India Retirement Fund – Wealth Creation Scheme | twenty one% | 14% | – |
| Tata Retirement Savings Fund Medium Plan | 15% | 14% | 17% |
| Aditya Birla Sun Life Retirement Fund – 30s Plan | 12% | 12% | – |
| Aditya Birla Sun Life Retirement Fund – 40s Plan | 11% | 11% | – |
| UTI Retirement Fund | 14% | 11% | 11% |
| UTI Retirement Benefit Pension Fund Plan | 14% | 11% | 11% |
| ICICI Prudential Retirement Fund – Hybrid Conservative Plan | Ten% | Ten% | – |
| Franklin India Pension Plan | Ten% | Ten% | 11% |
| HDFC Retirement Savings Fund – Hybrid Debt Plan Plan | Ten% | Ten% | – |
| Japan India Retirement Fund – Income Generation Scheme | 8% | 9% | – |
| Tata Retirement Savings Fund Conservative Plan | 8% | 9% | Ten% |
| ICICI Prudential Retirement Fund – Pure Debt Plan | 6% | 8% | – |
| Aditya Birla Sun Life Retirement Fund – 50s Plan | 7% | 7% | – |
| Aditya Birla Sun Life Retirement Fund – 50s Plus – Debt Plan | Five% | Five% | – |
PGIM Retirement Fund NFO – Should I invest?
This retirement benefit has a fixed period of five years or your retirement age, whichever is earlier. There is nothing great about such schemes except that they have a lock-in period during which investors cannot redeem their funds and this leads to compounding of growth.
However, the lock-in period is the biggest negative factor in such schemes. Instead of investing in these retirement funds, investors can invest in aggressive hybrid or balanced advantage funds, which are liquid and offer higher returns if invested for five years or more. As you can see, aggressive hybrid funds invest in similar mutual funds and have returned between 12% and 25% annually over the past five years. Similarly, Balanced Advantage funds have generated annualized returns of 10% to 18% over the past five years. I think these are an alternative option to retirement benefits.
Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. He has been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.
