ICICI Prudential Retirement Funds (Equity and Debt Plans) – Should you invest?

ICICI Prudential Retirement Funds ReviewICICI Prudential Retirement Funds (Equity and Debt Plans) Review


There is a flood of retirement mutual fund schemes now. ICICI Prudential Retirement Mutual Fund Schemes have opened for subscription on 7th February, 2019. ICICI Prudential Retirement Fund comes with 4 different plans i.e.Equity Plan, Hybrid Aggressive Plan, Hybrid Conservative Plan, and Pure Debt Plan. Each such plan has its unique features and investment objectives. Should you invest in the ICICI Prudential Retirement Fund? What are the risk factors of investing in ICICI Prudential Retirement Fund New Fund Offer (NFO)? This post is based on request on suggest a topic from Mr.Kumaraswamy.

Also Read: Best Largecap/Midcap Mutual Funds to invest in India

Features of ICICI Prudential 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 7th February, 2019

This scheme would close for subscription on 21st February, 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 ICICI Prudential 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) Pure Equity Plan – Suitable for 25 to 45 years of age.

2) Hybrid Aggressive Plan – Suitable for 46 to 50 years of age.

3) Hybrid Conservative Plan – Suitable for 51 to 56 years of age.

4) Pure Debt Plan – Suitable for 56 to 60 years of age.

What are the investment objectives of the ICICI Prudential Retirement Fund?


1) Pure Equity Plan: To generate long-term capital appreciation and income generation to investors from a portfolio that is predominantly invested in equity and equity related securities. However, there is no assurance or guarantee that the investment objective of the plan would be achieved. These are like equity mutual fund scheme.

2) Hybrid Aggressive Plan: An open ended hybrid scheme predominantly investing in equity and equity related securities to generate capital appreciation. The scheme may also invest in Debt, Gold/Gold ETF/units of REITs & InvITs and such other asset classes as may be permitted from time to time for income generation / wealth creation. However, there is no assurance or guarantee that the investment objective of the Scheme would be achieved.

3) Hybrid Conservative Plan: To generate regular income through investments predominantly in debt and money market instruments. The Scheme also seeks to generate long term capital appreciation from the portion of equity investments under the Scheme. However, there is no assurance or guarantee that the investment objective of the plan would be achieved.

4) Pure Debt Plan: To generate income through investing in a range of debt and money market instruments of various duration while maintaining the optimum balance of yield, safety and liquidity. However, there can be no assurance or guarantee that the investment objective of the plan would be achieved.

What are the benchmarks of the ICICI Prudential Retirement Fund?


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

1) Pure Equity Plan – NIFTY 500 INDEX

2) Hybrid Aggressive Plan – CRISIL HYBRID 35+65 Aggressive Index

3) Hybrid Conservative Plan – NIFTY 50 Hybrid Composite index 15: 85 plan

4) Pure Debt Plan – NIFTY composite debt 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 ICICI Prudential Retirement Fund NFO?


The investments under the Scheme will be managed by Mr.Mrinal Singh and Mr.Ashwin Jain for Equity related investments and Mr. Manish Banthia & Mr. Anuj Tagra for Debt portion. The Overseas investments under the scheme will be managed by Ms. Priyanka Khandelwal.

What is the allocation pattern in this mutual fund scheme?


A) This fund investment pattern for Pure Equity Plan is as follows:

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) This fund investment pattern for the Hybrid Aggressive Plan is as follows:

1) It invests 65% to 100% in equity instruments. This risk profile in this segment is medium to high.

2) It invests 0% to 35% in debt and money market instruments. This risk profile in this segment is low to medium.

3) It invests 0% to 35% in gold, gold ETFS and units issued by REITs and InvITs. This risk profile in this segment is medium to high.

C) This fund investment pattern for the Hybrid Conservative Plan is as follows:

1) It invests 70% to 95% in debt and money market instruments. This risk profile in this segment is low to medium.

2) It invests 5% to 30% in debt and money market instruments. This risk profile in this segment is medium to high.

3) It invests 0% to 10% in units issued by REITs and InvITs. This risk profile in this segment is medium to high.

D) This fund investment pattern for Pure Debt Plan is as follows:

1) It invests 0% to 100% in debt and money market instruments. This risk profile in this segment is low to medium.

2) It invests 0% to 10% in units issued by REITs and InvITs. This risk profile in this segment is medium to high.

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) Pure Equity Plan and Hybrid Aggressive Plan invests in equity, which is high risk.

5) Pure Debt plan and Hybrid conservative 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 solution oriented mutual fund schemes which are investing in specific themes 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 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 ICICI Prudential Retirement Fund?


Mutual Fund schemes can be good for retirement planning. There are two ways to do it. 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!!!

ICICI Prudential Retirement Fund NFO details can be downloaded from here.

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Suresh

ICICI Prudential Retirement Fund NFO – Should you invest

The Author

Suresh KP

Suresh KP i.e. me have written 1,800+ articles on this blog. I love doing analysis on various Best Investment Plans like mutual funds, Stocks, IPO's, NCD Bonds, Insurance products. If you like our blog, you can share some of the good articles on your Facebook or Twitter. This would be the BIGGEST gift which you would be giving to us.

6 Comments

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  1. As usual, one more valued effort from u..

    Sir,
    May i know if it possible to automatic debiting the SIP installment form my bank account to various AMC s at different date? then How? Is this facility available in MF utility n RTAs?

    1. Thank you Albin. There is an option available in MF Utility, I am not sure about exact path.

  2. Thanks please.

    Does it also imply that ICICI Pru had earlier NO MF offer in the retirement category.

    Sincerity in your articles is always transparent.

    Best wishes

    1. No Sudhir, there are no retirement funds floated by ICICI Prudential earlier.

  3. What the retirees and senior citizens require is steady inflow of monthly cash flows to maintain themselves and families.Observing the current carnage in Stock Markets,I advise retirees not to be tempted by such schemes. icicipru’s track record of giving regular returns is abysmal.The retirees should go in for Fixed Income instruments only.

    I suggest you introduce an archive’s page in the website as we cannot download/save your articles.

    1. Thank you Ramakrishna for your views. You can click on “Mutual Funds” category and these are available in that section.

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