Aditya Birla Sun Life Retirement Fund NFO – Should you Invest or Avoid?

Aditya Birla Sun Life Retirement Fund NFO - Should you investAditya Birla Sun Life Retirement Fund NFO Review


Last week, ICICI Prudential came up with Retirement Fund. Now it is time for another retirement fund. Aditya Birla Sun Life Retirement Mutual Fund Scheme would open for subscription on 19th February, 2019. Aditya Birla Sun Life Retirement Fund came with 4 different plans, i.e. ‘The 30s Plan’, ‘The 40s Plan’, ‘The 50s Plan’ and ‘The 50s plus Debt Plan’. Each such plan has its unique features and investment objectives. Should you invest in the Aditya Birla Sun Life Retirement Fund? What are the risk factors of investing in Aditya Birla Sun Life Retirement Fund New Fund Offer (NFO)? This post is based on request put by one of the readers on suggest a topic on our website.

Also Read: Best Investment Options to get higher returns in 2019

Features of Aditya Birla Sun Life Retirement Fund


This is an open-ended mutual fund equity scheme.

This is a solution oriented mutual fund scheme whose objective is to create wealth for retirement.

This scheme would open for subscription on 19th February, 2019

This scheme would close for subscription on 5th March, 2019.

This scheme has lock-in period of 5 years till retirement whichever is earlier.

Since this is an open ended scheme, it would again open for subscription after 5 business days from the date of allotment of Mf units after the NFO period.

This scheme is available in both regular and direct plans.

This plan offers both growth option and dividend options.

This scheme is available for lump sum and SIP investment.

Minimum investment is Rs 5,000 and in multiples of Rs 1,000 there-off for lump sum investments.

Minimum investment is Rs 500 per month for monthly SIP and for a tenure of 6 months.

The NAV of the NFO is Rs 10 per unit now during initial subscription.

There is no entry load to invest in this mutual fund scheme.

If one wants to exit after 5 years of investment, there is a no exit load.

Scheme total expense ratio (TER) is estimated up to 2.5% of the total assets on any day for the Pure equity plan and Hybrid Aggressive plan.

Scheme total expense ratio (TER) is estimated up to 2.25% of the total assets on any day for the Pure Debt plan and hybrid conservative plan.

What are the various plans available in the Aditya Birla Sun Life Retirement Fund?


This retirement fund comes with 4 different sub funds. This would be added to the fund name at the end to differentiate the plan.

1) ‘The 30s Plan’ – Suitable for 25 to 35 years of age.

2) ‘The 40s Plan’ – Suitable for 35 to 45 years of age.

3) ‘The 50s Plan’ – Suitable for 45 to 50 years of age.

4) ‘The 50s plus Debt Plan’ – Suitable for over 50 years of age.

What is the investment Strategy of the Aditya Birla Sun Life Retirement Fund?


1) Aditya Birla Sun Life Retirement Plan – The 30s Plan:

The Plan aims to invest primarily in a well-diversified portfolio of equity and equity related securities. The fund manager proposes to concentrate on business and economic fundamentals driven by in-depth research techniques and employing the full potential of the research team at the AMC. The stock selection process proposed to be adopted is generally a bottom-up approach, seeking to identify companies with long term sustainable competitive advantage. The fund would also use a top down discipline by ensuring representation of companies from all key sectors in respective benchmarks.

2) Aditya Birla Sun Life Retirement Plan – The 40s Plan:

The Plan invests predominantly in equity and equity related instruments with marginal allocation to debt and money market instruments.

On the equity front, the fund manager proposes to concentrate on business and economic fundamentals driven by in-depth research techniques and employing the full potential of the research team at the AMC.  On the debt front, the Fund invests in various debt securities and money market instruments issued by corporates and/or state and central government.

3) Aditya Birla Sun Life Retirement Plan – The 50s Plan:

The Plan invests predominantly in debt and money market instruments with marginal allocation to equity and equity related instruments.

On the debt front, the Fund invests in various debt securities and money market instruments issued by corporates and/or state and central government. On the equity front, the fund manager proposes to concentrate on business and economic fundamentals driven by in-depth research techniques and employing the full potential of the research team at the AMC.

4) Aditya Birla Sun Life Retirement Plan – The 50s Plus – Debt Plan:

The Plan invests in various debt securities and money market instruments issued by corporates and/or state and central government. The AMC aims to identify securities, which offer superior levels of yield at lower levels of risk.

What are the benchmarks of the Aditya Birla Sun Life Retirement Fund?


Here are the benchmarks on how the fund performance is measured.

1) ‘The 30s Plan’ – S&P BSE 200

2) ‘The 40s Plan’ – CRISIL Hybrid 35+65 – Aggressive Index

3) ‘The 50s Plan’ – CRISIL Short Term Debt Hybrid 75+25 Fund Index

4) ‘The 50s plus Debt Plan’ – CRISIL Short Term Bond Fund Index

What is the lock-in period indicated in this mutual fund scheme?


These mutual fund schemes come with lock-in period like tax saving mutual funds. Below criteria would apply, whichever is earlier.

1) You can redeem the mutual fund schemes after 5 years or

2) Till the retirement age

Who can invest in this mutual fund scheme?


Any of the following can invest in this scheme.

1) Resident Indians

2) NRIs

3) Minor through Parent

Who is the Fund Manager of Aditya Birla Sun Life Retirement Fund NFO?


Mr. Ajay Garg and Mr. Pranay Sinha are the fund managers for these retirement plans.

What is the allocation pattern in this mutual fund scheme?


A) Aditya Birla Sun Life Retirement Plan – The 30s Plan:

1) It invests 80% to 100% in Equity and Equity related Instruments in India. This risk profile in this segment is medium to high.

2) It invests 0% to 20% in debt and money market instruments. This risk profile in this segment is low to medium.

B) Aditya Birla Sun Life Retirement Plan – The 40s Plan:

1) It invests 65% to 80% in equity instruments. This risk profile in this segment is medium to high.

2) It invests 20% to 35% in debt and money market instruments. This risk profile in this segment is low to medium.

C) Aditya Birla Sun Life Retirement Plan – The 50s Plan:

1) It invests 75% to 100% in debt and money market instruments. This risk profile in this segment is low to medium.

2) It invests 0% to 25% in debt and money market instruments. This risk profile in this segment is medium to high.

D) Aditya Birla Sun Life Retirement Plan – The 50s Plus – Debt Plan:

It invests 100% in debt and money market instruments. This risk profile in this segment is low to medium. Means these mutual funds are low risk.

Can NRI invest in this MF scheme?


Yes, they can invest in this scheme. They can invest on repatriation or non repatriation basis.

What is the liquidity / Redemption plan?


Since it has 5 year lock-in period or maturity till retirement, whichever is earlier, the liquidity / redemption can be done immediately after this. However, the process of redemption would happen between 5 to 10 days.

What are the risks or negative factors involved in this fund?


One should consider some of these risk factors / negative factors before investing.

1) This scheme comes with lock-in period of 5 years or till retirement whichever is earlier. Even ELSS tax saving fund has 3 year low lock-in period, compared to this 5 year lock in period.

2) Investors should not assume any guaranteed returns from such retirement funds.

3) Since it is a new mutual fund scheme, there is no past performance, hence we would know how the fund would perform in the future.

4) The 30s Plan, 40s plan and 50s plan invests in equity instruments, which are high risk.

5) 50s Plan and 50s plus debt plan invests in corporate debt instruments which are high risk. If there is a change in credit rating, liquidity could be an issue for such debt instruments.

How is the Performance of Retirement Mutual Funds in India?


Currently there are existing mutual fund schemes which are investing in solution oriented categories like retirement. Let us see how they have been performing in the last 5-10 years.

1) TATA Retirement Savings Fund Moderate Plan: This fund gave 19% annualized returns in the last 5 years, 15% annualised returns in the last 3 years. However, this fund gave 4% negative returns in the last 1 years owning to down trend in the stock markets.

2) Franklin India Pension Fund: This fund gave 11% annualized returns in the last 10 years, 12% annualized returns in the last 5 years, 9% annualised returns in the last 3 years. However, this fund gave 2% returns in the last 1 years owning to down trend in the stock markets.

3) UTI Retirement Benefit Pension Fund: This fund gave 10% annualized returns in the last 10 years, 10% annualized returns in the last 5 years, 9.6% annualised returns in the last 3 years. However, this fund gave 3% negative returns in the last 1 years owning to down trend in the stock markets.

How is the Performance of Hybrid Aggressive Mutual Funds in India?


Currently there are funds that are hybrid aggressive high return mutual funds which are considered as one of the best ways to plan for retirement planning. Let us see how they have been performing in the last 5-10 years.

1) HDFC Hybrid Equity Fund: This fund gave 19% annualized returns in the last 10 years, 16% annualized returns in the last 5 years, 14% annualised returns in the last 3 years. However, this fund gave 4% negative returns in the last 1 years owning to down trend in the stock markets.

2) ICICI Pru Equity and Debt Fund: This fund gave 17% annualized returns in the last 10 years, 15% annualized returns in the last 5 years, 14% annualised returns in the last 3 years. However, this fund gave 5% negative returns in the last 1 years owning to down trend in the stock markets.

3) Reliance Equity Hybrid Fund: This fund gave 17% annualized returns in the last 10 years, 15% annualized returns in the last 5 years, 12% annualised returns in the last 3 years. However, this fund gave 8% negative returns in the last 1 years owning to down trend in the stock markets.

4) TATA Hybrid Equity Fund: This fund gave 17% annualized returns in the last 10 years, 14% annualized returns in the last 5 years, 9% annualised returns in the last 3 years. However, this fund gave 4% negative returns in the last 1 years owning to down trend in the stock markets.

Should you invest in the Aditya Birla Sun Life Retirement Fund?


Mutual Fund schemes can be good for retirement planning. As indicated in my previous retirement mutual fund article, there are two ways you can do retirement planning through mutual funds. 1) You can invest in equity mutual fund schemes based on your age and tenure for retirement. For this you can invest in Best Aggressive Hybrid Mutual Fund schemes that can perform better in the medium to longer run 2) You can invest in a solution based mutual funds that are specially designed like for retirement. However, such retirement funds may come with several strings attached to it. E.g. 5 years lock-in period for this specific mutual fund scheme. However, if you are going for the new fund offer, you have not seen the  past performance, hence you do not know how such fund would perform. Since you are investing for your retirement which is long term planning, instead of taking a risk, why don’t you invest in some of the best performing Hybrid Aggressive or Conservative mutual fund schemes which are already existing in the market? Think… Think… Think.. You may conclude your thoughts!!!

Aditya Birla Sun Life Retirement Fund NFO details can be downloaded from here.

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Suresh

Aditya Birla Sun Life Retirement Fund NFO Review

6 comments

  1. I invested in its NFO with Rs.1000 at beginning, but not started any SIP till date. Can i start SIP now?

    1. Hello Deepak, There are aggressive hybrid funds which invests in equity + low debt. There is some risk element here. There are conservative hybrid funds which invests more in debt funds and very less or zero in equity. The risk is lower compared to other one. I feel one can go with Aggressive hybrid fund to get some exposure to equity and for higher returns. you can refer this article for more info. https://myinvestmentideas.com/2018/07/top-10-aggressive-balanced-mutual-funds-to-invest-in-2018-2019/

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