SBI Retirement Benefit Fund NFO – A Review
SBI Mutual Fund has launched Retirement Benefit Fund. SBI Retirement Benefit Fund NFO would open for subscription on 20th January, 2021. SBI MF has come up in 4 different investment plans in this fund category which would be Aggressive, Aggressive Hybrid, Conservative Hybrid and Conservations plans. Should you invest in SBI Retirement Benefit Fund NFO or avoid? Are there any hidden risk factors which an investor should know before investing in such retirement solution based mutual fund schemes?
Also Read: 15 Best Mutual Funds to invest in 2021
Investment Plans in SBI Retirement Benefit Fund
SBI MF offers 4 different plans in this retirement MF scheme.
1) SBI Retirement Benefit Fund – Aggressive Plan
2) SBI Retirement Benefit Fund – Aggressive Hybrid Plan
3) SBI Retirement Benefit Fund – Conservative Hybrid Plan
4) SBI Retirement Benefit Fund – Conservative Plan
SBI Retirement Benefit Fund NFO Issue Details
This is an open-ended mutual fund equity scheme. Here are the NFO issue details.
| SBI Retirement Benefit Fund – NFO Issue Details | |
|---|---|
| Scheme Opens | 20-Jan-21 |
| Scheme Closes | 03-Feb-21 |
| Scheme reopens for continous purchase/sale | Within 5 days from closure |
| Minimum investment (Lumpsump) | ₹ 5,000 |
| Minimum investment (SIP) | ₹ 1,000 for 6 months |
| NAV of the fund | ₹ 10 during NFO period |
| Entry Load | Nil |
| Exit Load | Nil |
| Risk | Moderately to High Risk depending on plan |
| Max Total expense Ratio (TER) | Upto 2.25% |
| Fund Manager | Mr. Dinesh Ahuja (Debt) Mr. Gaurav Mehta (Equity) Mr. Mohit Jain (Overseas investments) |
Download SBI Retirement Benefit Fund NFO SID (Aggressive plan link)
What is the investment objective and strategy of SBI Retirement Benefit Fund NFO?
The investment objective of the scheme is to provide a comprehensive retirement saving solution that serves the variable needs of the investors through long term diversified investments in the major asset classes.
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 investment pattern is as follows:
| Aggressive Plan | |||
|---|---|---|---|
| Type of instruments | Min % | Max % | Risk Profile |
| Equity & Equity Related Instruments | 80% | 100% | High |
| Debt and Money Market Instruments | 0% | 20% | Low to Moderate |
| Units of REITs and InvITs | 0% | 10% | Medium to High |
| Gold ETFs | 0% | 20% | Medium to High |
| Aggressive Hybrid Plan | |||
|---|---|---|---|
| Type of instruments | Min % | Max % | Risk Profile |
| Equity & Equity Related Instruments | 65% | 80% | High |
| Debt and Money Market Instruments | 0% | 35% | Low to Moderate |
| Units of REITs and InvITs | 0% | 10% | Medium to High |
| Gold ETFs | 0% | 20% | Medium to High |
| Conservative Hybrid Plan | |||
|---|---|---|---|
| Type of instruments | Min % | Max % | Risk Profile |
| Equity & Equity Related Instruments | 10% | 40% | High |
| Debt and Money Market Instruments | 60% | 90% | Low to Moderate |
| Units of REITs and InvITs | 0% | 10% | Medium to High |
| Gold ETFs | 0% | 20% | Medium to High |
| Conservative Plan | |||
|---|---|---|---|
| Type of instruments | Min % | Max % | Risk Profile |
| Equity & Equity Related Instruments | 0% | 20% | High |
| Debt and Money Market Instruments | 80% | 100% | Low to Moderate |
| Units of REITs and InvITs | 0% | 10% | Medium to High |
| Gold ETFs | 0% | 20% | 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.
Why should you invest in such Mutual Funds?
Here are a few reasons to invest in such schemes.
1) The SBI retirement benefit fund provides 4 plans to choose. Such plans can be chosen by high risk, moderate risk and low risk investors depending on their risk appetite and tenure of investment.
2) These funds would invest in equity, hybrid and debt instruments based on investment plans chosen. Investors have different choices to choose from. They can chose 1 fund or multiple funds too.
Some key risk factors you should consider before you invest in such funds
One should consider some of these risk factors / negative factors before investing.
1) These retirement benefit funds have lock-in period of 5 years. While it is good that the investment would get locked and such investment would grow, in case of emergency, one cannot withdraw the money.
2) SBI Retirement Benefit fund aggressive plan, invest up to 100% in equity which is high risk.
3) The conservative plan invests in debt instruments. These days, even debt instruments have become risky due to downgrade of credit rating of corporates or wherever MFs have invested in commercial papers of corporates, such companies are defaulting when due.
4) This fund invests in overseas investment options too, where there is forex conversion risk and geopolitical risks.
5) These funds would invest in derivatives, which are high risk.
6) Since it is a new mutual fund scheme, there is no past performance, hence we would not know, how the fund would perform in the future.
7) For complete risk factors, one can refer SID / KIM / Prospectus of the mutual fund schemes.
How is the Performance of Retirement Benefit Funds?
Currently there are existing retirement benefit funds. Here is the performance of these funds in the last 3 to 10 years tenure. The annualized returns ranging between -0.5% to 15.7%.
| Equity Category | |||
|---|---|---|---|
| Fund Name | 3 Year | 5 Year | 10 Year |
| Tata Retirement Savings Fund – Progressive Plan | 7.0% | 15.7% | – |
| Nippon India Retirement Fund – Wealth Creation Scheme | -0.5% | 8.3% | – |
| HDFC Retirement Savings Fund Equity Plan | 6.0% | – | – |
| Hybrid category | |||
|---|---|---|---|
| Fund Name | 3 Year | 5 Year | 10 Year |
| Tata Retirement Savings Fund – Moderate Plan | 7.1% | 14.3% | – |
| Tata Retirement Savings Fund – Conservative Plan | 6.8% | 9.7% | – |
| UTI Retirement Benefit Pension Fund | 3.6% | 8.4% | 8.3% |
| Nippon India Retirement Fund – Income Generation Scheme | 7.7% | 8.4% | – |
| HDFC Retirement Savings Fund – Hybrid Equity Plan | 7.8% | – | – |
| HDFC Retirement Savings Fund – Hybrid Debt Plan | 6.1% | – | – |
Also Read: Best Balanced Mutual Funds to invest in 2021
Should you invest in SBI Retirement Benefit Fund NFO?
SBI MF Retirement Benefit Fund comes with 4 different plans. High risk, moderate risk and low risk investors can choose the plan depending on their risk appetite and tenure of investment. However, one should be aware of the lock-in period of 5 years. Investors cannot withdraw till 5 years even in case of emergency. If you want to lock your money for 5+ years, willing to take risks and also want to test with new mutual fund schemes, you can invest in these funds. Otherwise, you should stay away from such schemes.
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Sir I am 43 Years old I am interested to invest Retirement solution schemes .This SBI MF is best ? If best what scheme to select
Thanks
Mahendran, Request you to go through the scheme features. Based on your risk appetite, you can opt for relevant fund
Dear Sir,
I am 53 year old and I would like to invest in SBI Retirement Benefit fund aggressive plan. Could you advise is it ok or I have to choose Hybrid.
If you can invest for 8 to 10 years, then you can go ahead with aggressive plan, else go for conservative plan
Sir,
Am planning for investment for 8-10 yrs, since am 52 yrs now. Which SBI MF Retirement Benefit Fund scheme will be suitable for me. Can invest bit amount lumpsum & also go for SIP. Need ur kind advice.
Thanks,
Hello Sreenivas garu, At your age and investment horizon of 10 years, you can go for Aggressive Hybrid fund
Sir, question on SBI MF Retirement Benefit Fund. If I invest via SIP of Rs. 5000/- PM for 5 years – will the last SIP amount will be locked for 5 years or will I be able to withdraw total invested amount via SIP after completion of 5 years?
Thank You.
Hello Anand, Each SIP is treated as seperate investment and lock-in period of 5 years would apply for each of them. In your example, last SIP need to complete 5 years time frame.
Thanks for the detailed info. The fund claims to offer term insurance for SIP investors, however are there any charges towards this insurance? Like, mortality charges or insurance premium etc.?
Hello Prasad, This term insurance feature is provided under SBI MF SIP Insure feature who want to opt for 3 years SIP. In this case 100 times of SIP value would be provided as term insurance from 3rd year onwards (lesser value in 1 to 2 years). however, if one misses SIP for 2 times, such Term insurance would get terminated. Life insurance provides financial assistance in absence of earning member of the family. Hence one should avoid considering term insurance with such schemes as there are always chances that one can miss their SIP in future
your research is very helpful for investing in NFOs. Thank you
Thank you Abira