Best Mutual Funds for Retirement Planning

03 May 2024
6 min read
Best Mutual Funds for Retirement Planning
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(The mutual funds mentioned in the blog are as per 3-year annualised returns)

Preparing for retirement can be daunting for most of us. One of the ways to ensure a comfortable retirement is to opt for mutual funds.

In a world where financial stability is paramount, identifying the best retirement funds in India for 2024 becomes a crucial task. Go through this blog to explore some of the best mutual funds for retirement planning based on 3-year returns.

List of Best Retirement Funds in India for 2024 (as per 3Y Returns)

Here is a table highlighting the top retirement mutual funds of 2024 (as per 3Y Returns):

S.No.

Fund Name

3Y Return (Annualised)

1.

ICICI Prudential Retirement Fund Pure Equity Plan Direct-Growth

33.36%

2.

HDFC Retirement Savings Fund Equity Plan Direct-Growth

28.08%

3.

ICICI Prudential Retirement Fund Hybrid Aggressive Plan Direct-Growth

23.74%

4.

SBI Retirement Benefit Fund Aggressive Plan Direct-Growth

23.58%

5.

Nippon India Retirement Fund Wealth Creation Scheme Direct-Growth

23.25%

*Our mutual fund selection criteria for top mutual funds listed above are mentioned at the bottom of this blog.

Overview of the Best Mutual Funds for Retirement Planning (as per 3Y Returns)

Here is a brief overview of the best retirement mutual funds in 2024 (as per 3Y Returns):

  • ICICI Prudential Retirement Fund Pure Equity Plan Direct-Growth

  • The fund has ₹649.09 crores worth of AUM as of March 31, 2024, and an expense ratio of 0.71%. 
  • It has allocated 93.75% of its investments in equities, which includes 53.3% of large-cap stocks, 14.78% of mid-cap stocks and 12.86% of small-cap stocks.
  • Its top holdings include Bharti Airtel Limited, Larsen & Toubro Limited, DLF Limited, Tech Mahindra Limited, Ambuja Cements Limited, Maruti Suzuki India Limited, Ultratech Cement Limited and more.
  • This investment fund has delivered a yearly gain of 22.58% in the majority of cases for investors who maintain their position for at least five years. Furthermore, for each level of risk undertaken, it yields returns that are 20% higher.
  • HDFC Retirement Savings Fund Equity Plan Direct-Growth

  • The fund has ₹4,830.28 crores worth of AUM as of March 31, 2024, and an expense ratio of 0.68%. 
  • It has allocated 89.74% of its investments in equities which includes 48.81% of large-cap stocks, 9.45% of mid-cap stocks and 17.4% of small-cap stocks.
  • Its holding includes ICICI Bank, HDFC Bank, Axis Bank, Reliance Industries Limited, State Bank of India, Bajaj Auto Limited, Infosys Limited, Bharti Airtel Limited, Larsen & Toubro Limited and ITC Limited.
  • This fund has provided 20% more returns for every risk taken. 
  • ICICI Prudential Retirement Fund Hybrid Aggressive Plan Direct-Growth

    • The fund has ₹366.59 crores worth of AUM as of March 31, 2024, and an expense ratio of 0.66%. 
    • It has allocated 80.02% of its investments in equities, including 46.78% of large-cap stocks, 20.73% of mid-cap stocks, and 12.52% of small-cap stocks. Additionally, it allocates 7.87% in debt, including 4.79% in government securities.
    • Its holdings include Bharti Airtel Limited, Ambuja Cements Limited, GOI, Lupin Limited, Interglobe Aviation Limited, Ultratech Cement Limited, Jindal Stainless Limited, Inox Wind Limited, Tech Mahindra Limited, and more.
    • This fund has given an annual return of 17.85% to investors who have maintained this fund for more than 5 years.
  • SBI Retirement Benefit Fund Aggressive Plan Direct-Growth

  • The fund has ₹2,213 crores worth of AUM as of March 31, 2024, and an expense ratio of 0.84%.
  • It has allocated 93.65% of its investments in equities, including 45.41% of large-cap stocks, 16.33% of mid-cap stocks, and 14.07% of small-cap stocks. Additionally, it allocates 4.09% in debt, including 3.85% in government securities and 0.24% in low-risk securities.
  • Its holdings include Maruti Suzuki India Limited, Infosys Limited, Reliance Industries Limited, Timken India Limited, Abbott India Limited, TVS Motor Company Limited, Kajaria Ceramics Limited, Hindalco Industries Limited, and more.
  • Nippon India Retirement Fund Wealth Creation Scheme Direct-Growth

  • The fund has ₹3,003.63 crores worth of AUM as of March 31, 2024, and an expense ratio of 0.96%. 
  • It has allocated 97.32% of its investments in equities which includes 53.92% of large-cap stocks, 9.59%of mid-cap stocks and 8.11% of small-cap stocks. 
  • Its holdings include Kaynes Technology India Limited, Tata Consultancy Services Limited, Dixon Technologies Limited, Cyient DLM, Bosch Limited, NTPC, Infosys Limited, Bajaj Finance Limited, Axis Bank, ICICI Lombard General Insurance and more.

Factors to Consider Before Investing in the Retirement Funds in 2024

The following are the factors you need to consider before investing in the best mutual funds for retirement planning:

  • Define Your Investment Goals

Align your investment goals with the objectives of the mutual funds you choose, ensuring they meet your needs and keep you motivated. Define your retirement goals, including the age you plan to retire, desired lifestyle, and any major expenses you anticipate, such as healthcare or travel.

  • Past Performance

Analyse the historical performance of the mutual fund during different time periods. Look for the funds that have been providing consistent returns in the past and compare the performance of the mutual fund against its benchmark.

  • Choose Your Payout Method

Decide whether you prefer receiving a lump sum or periodic payments at the end of your investment period, based on your future needs and goals.

  • Tax Implications

You must be aware of the tax implications of retirement funds, as returns are taxable upon redemption. Choose tax-efficient investments to optimise your retirement savings, considering factors like the tax rates on capital gains for equity and debt funds.

  • Time Horizon

Consider your time horizon until retirement. Longer time horizons may allow for more aggressive investment strategies, while shorter time horizons may require more conservative approaches.

  • Consider Your Risk Tolerance

Look into what types of assets retirement funds invest in to understand the level of risk and volatility you will face through it. Assess your risk tolerance based on your age, financial situation, and comfort level with market fluctuations. Generally, younger investors can afford to take on more risk, while older investors may prefer more conservative investments.

  • Liquidity

Evaluate the liquidity of the mutual funds, especially if you anticipate needing access to your funds before retirement. Some funds may have restrictions or penalties for early withdrawals.

The Bottom Line

Buying the best retirement funds can be a profitable choice for those individuals who are looking to secure a better financial future. However, remember to consider the above-mentioned factors before investing in these funds and review your portfolio while making investment decisions.

Also, remember that mutual funds are subject to market risk. You should pick mutual funds carefully for your portfolio or consider consulting a financial advisor for more guidance.

*Mutual Funds Selection Criteria for Top Mutual Funds Listed Above

These mutual funds are listed based on the 3-year annualised returns. The selection is arranged in descending order. It is important to note that 3-year returns in no way guarantees a mutual fund’s performance. However, it can be used as a criterion for shortlisting mutual funds from within a category. Investors should recognise that other factors, such as financial health, management efficiency, and market trends, play crucial roles in determining the actual success of an investment. 

This mutual fund selection should not be construed as investment advice/recommendations/offer/solicitation of an offer to invest in any mutual funds by Groww Invest Tech Pvt. Ltd. (formerly known as Nextbillion Technology Pvt. Ltd.).

Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.

To read the RA disclaimer, please click here
Research Analyst - Aakash Baid

Disclaimer

The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. Groww Invest Tech Pvt. Ltd. (Formerly known as Nextbillion Technology Pvt. Ltd) Ltd. do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
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