Baroda BNP Paribas MF has launched Retirement Fund NFO. This retirement fund carries a lock-in period of 5 years. Investors often wonder whether to opt for simple mutual funds or solution-based retirement funds for retirement planning. Should you consider investing in the Baroda BNP Paribas Retirement Fund NFO? Additionally, what alternative mutual funds that one can invest for retirement planning?
Baroda BNP Paribas Retirement Fund NFO Issue Details
Here are the issue details of the NFO.
| Fund Name | Baroda BNP Paribas Retirement Fund |
| NFO Opens | 08-May-24 |
| NFO closes | 22-May-24 |
| Scheme reopens for continuous purchase/sale | Within 5 working days |
| Minimum Application Amount | Rs 1,000 and in multiples of Rs 1 thereafter |
| Minimum SIP | Rs 500 for 6 months |
| NAV of the fund | Rs 10 during NFO period |
| Entry Load | Nil |
| Exit Load | Nil |
| Risk | Very High Risk |
| Benchmark | CRISIL Hybrid 35+65- Aggressive Index |
| Fund Manager | Pratish Krishnan Mayank Prakash |
Baroda BNP Paribas Retirement Fund NFO SID
Baroda BNP Paribas Retirement Fund NFO – What is the investment objective?
The primary investment objective of the Scheme is to generate income and capital appreciation by investing in a diversified portfolio of equity and equity related instruments and fixed income instruments with a view to provide a retirement solution to investors.
However, there can be no assurance that the investment objective of the scheme will be achieved. The scheme does not guarantee/ indicate any returns.
What is the allocation pattern in this mutual fund scheme?
This fund invests pattern is as follows:
| Type of instruments | Min % | Max % | Risk Profile |
|---|---|---|---|
| Equity & Equity related instruments | 65% | 80% | High |
| Debt & Money Market instruments companies other than above |
20% | 35% | Low to Medium |
| Units of REITs and InvITs | 0% | 10% | Medium to High |
Why should you invest in Baroda BNP Paribas Retirement Fund NFO?
This retirement fund has a lock-in period of 5 years or till retirement age whichever is earlier. This can help investors to invest for a medium to long term in such funds.
Baroda BNP Paribas Retirement Fund NFO – Risk Factors or Negative Factors
One should consider some of these risk factors / negative factors before investing.
- This retirement fund has a lock-in period of 5 years or till retirement age whichever is earlier. While it is good that the investment would get locked and such investment would grow, in case of emergency, one cannot withdraw their investment.
- This fund invests between 65% to 80% in equity, which is at high risk.
- This fund would invest in debt instruments where there is interest rate risk, reinvestment risk, liquidity risk and default risk.
- The fund also invests in REITs and InvITs, which are considered riskier assets.
- For complete risk factors, one can refer SID / KIM / Prospectus of the mutual fund schemes.
How is the Performance of Existing Retirement Funds?
Existing retirement funds has generated 5% to 24% returns in the last 5 years. Here is the scheme wise performance.
| Scheme Name | 3 Yrs | 5 Yrs | 10 Yrs |
|---|---|---|---|
| ICICI Prudential Retirement Fund – Pure Equity Plan | 33% | 24% | – |
| HDFC Retirement Savings Fund – Equity Plan | 28% | 23% | – |
| ICICI Prudential Retirement Fund – Hybrid Aggressive Plan | 23% | 19% | – |
| HDFC Retirement Savings Fund – Hybrid- Equity Plan | 19% | 17% | – |
| Tata Retirement Savings Fund – Direct Plan – Progressive Plan | 18% | 16% | 18% |
| Tata Retirement Savings Fund – Direct Plan – Moderate Plan | 17% | 15% | 17% |
| Nippon India Retirement Fund – Wealth Creation Scheme | 23% | 15% | – |
| Aditya Birla Sun Life Retirement Fund – The 30s Plan | 15% | 13% | – |
| Aditya Birla Sun Life Retirement Fund – The 40s Plan | 13% | 12% | – |
| UTI Retirement Benefit Pension Fund – Direct Plan | 14% | 11% | 11% |
| UTI Retirement Fund | 14% | 11% | 11% |
| ICICI Prudential Retirement Fund – Hybrid Conservative Plan | 10% | 10% | – |
| Franklin India Pension Plan | 10% | 10% | 11% |
| HDFC Retirement Savings Fund – Hybrid-Debt Plan | 10% | 10% | – |
| Tata Retirement Savings Fund – Direct Plan – Conservative Plan | 8% | 9% | 10% |
| Nippon India Retirement Fund – Income Generation Scheme | 8% | 9% | – |
| ICICI Prudential Retirement Fund – Pure Debt Plan | 6% | 8% | – |
| Aditya Birla Sun Life Retirement Fund – The 50s Plan | 7% | 7% | – |
| Aditya Birla Sun Life Retirement Fund – The 50s Plus – Debt Plan | 5% | 5% | – |
| Axis Retirement Savings Fund – Aggressive Plan | 13% | – | – |
| Axis Retirement Savings Fund – Conservative Plan | 10% | – | – |
| Axis Retirement Savings Fund – Dynamic Plan | 15% | – | – |
| SBI Retirement Benefit Fund – Aggressive Hybrid Plan | 20% | – | – |
| SBI Retirement Benefit Fund – Aggressive Plan | 23% | – | – |
| SBI Retirement Benefit Fund – Conservative Hybrid Plan | 12% | – | – |
| SBI Retirement Benefit Fund – Conservative Plan | 9% | – | – |
Baroda BNP Paribas Retirement Fund NFO – Should you invest?
This retirement fund comes with lock-in period of 5 years or retirement age whichever is earlier. There is nothing great about such schemes except that there is a lock-in period and during that period, investors cannot redeem the funds and this would help in compounding growth.
However, lock-in period is the biggest negative factor in such schemes. One cannot withdraw money in case of any emergency. Instead of investing in such retirement funds, investors can invest in aggressive hybrid funds or balanced advantage funds where there is liquidity + higher returns if they invest for over 5 years. If you see, aggressive hybrid funds invest in similar lines and generated 12% to 26% annualized returns in the last 5 years. Similarly Balanced Advantage Funds generated 10% to 19% annualised returns in last 5 years. I feel these are some of the alternative options in place of retirement funds.
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