Retirement planning is something which can be easily delayed and worry about in the later part of our life. This thought especially crosses our mind when we are young.

We might think that everything eventually will fall into place, right?

Well, what if things don’t work out later? Has this thought crossed our mind?

The hard truth is that life can come and hit us hard anytime and therefore, developing a solid plan to tackle such a situation becomes critical. The best way to do this is to plan for our retirement.

Also, as the age for retirement in several companies is 60, we might start with this as soon as we hit the workforce.

In this article we will discuss about the various mutual funds we can invest in that might cater to the needs of our family after retirement.

Let’s begin!

(Note: We have highlighted funds based on people who are young (between the age group of 25-40 years).

However, the people who already have crossed this age might exclude some more risky funds such as small and mid-caps and multi cap funds. Instead, we can opt for balanced funds and less risky funds)

We have curated a list of five funds for complete retirement planning. This comprises of the following:-

  • Two large-cap funds
  • A multi-cap fund;
  • A small-cap fund
  • An index fund

The list has been prepared such that the two large caps funds generate stable returns (having moderate risk). Also the multi-cap and small cap funds that adequate risk exposure.

As the time frame for the investment is long, many market cycles (up and down movements of the market will play) and will give enough time for these small and mid-size companies to grow.

Lastly, index funds track the index and hence provide stability to the mutual fund portfolio.

Best Mutual Funds for Retirement Planning- Details

The 5 best mutual funds for retirement planning are as follows

1.Reliance Large Cap Fund – Direct – Growth

Launched in 2013, this fund has consistently beaten the benchmark.

If we do a close analysis of the holdings, we can see that the fund managers are a firm believer in India’s growth story. This is because there is heavy reliance on sectors such as financials, healthcare, engineering etc.

Some marquee names in the list are SBI, L&T, Axis Bank Ltd., ICICI Ltd., HDFC Bank Ltd., ITC, Bajaj Finance etc

Key Information:

Launch Date01 – Jan – 2013
NAV (25-Jan-2019)34.4
Plan TypeDirect
Ratings by Groww5 Star
AUM (Fund Size)11,740 crores
RiskometerModerately High
Minimum SIP100
Performance wr.t. its BenchmarkConsistently beaten its benchmark NIFTY 100 TRI
Age of the Fund6 years
Expense Ratio1.20%
Exit LoadExit load is 1% if redeemed between 0 to 12 months, else 0%
TypeEquity – Large Cap
Fund ManagerAshwani Kumar, Sailesh Raj Bhan

Investment Objective

There is a two-fold investment objective for the fund as follows:

  • To generate long term capital appreciation by investing in equity and equity related instruments of companies, the market capitalization of which is within the range of highest and lowest market caps of BSE 200 Index.
  • The secondary objective of the fund is to invest in debt and money market securities and seek consistent returns

Holding Analysis

2.ICICI Prudential Bluechip Equity Fund – Direct – Growth

This scheme was launched in 2013 and has a 5 Star rating.

It has beaten its benchmark NIFTY 100 TRI throughout. With major focus on key sectors and big names like ICICI Bank, HDFC Ltd. HDFC Bank Ltd., ITC Ltd., Infosys, Motherson Sumi Systems Ltd. etc, it will provide stability to the portfolio in the long run.

Key Information

Launch Date01 – Jan – 2013
NAV (25-Jan-2019)41.8
Plan TypeDirect
Ratings by Groww5 Star
AUM (Fund Size)20,115 crores
RiskometerModerately High
Minimum SIP100
Performance wr.t. its BenchmarkConsistently beaten its benchmark NIFTY 100 TRI
Age of the Fund6 years
Expense Ratio1.21%
Exit LoadExit load is 1% if redeemed between 0 to 12 months, else 0%
TypeEquity – Large Cap
Fund ManagerS Naren, Rajat Chandak

Investment Objective

The investment objective here is two-fold as follows:

  • The fund managers seek to generate long term capital appreciation and income distribution through investment in Top 200 stocks (equity and equity related instruments) in terms of market capitalization on the National Stock Exchange (NSE);
  • The fund manager also puts part of the money in debt securities and money market instruments

Holding Analysis

 

3.Mirae Asset India Equity Fund – Direct – Growth

This fund has been selected to gain a ground on other sectors apart from large caps, meaning a few mid cap stocks as well.

At the same time it has adequate exposure to large caps thereby this does not entail huge amount of risk. The fund has beaten its benchmark consistently and also has a low expense ratio.

Key Information:

Launch Date01 – Jan – 2013
NAV (25-Jan-2019)49.9
Plan TypeDirect
Ratings by Groww5 Star
AUM (Fund Size)10,128 crores
RiskometerModerately High
Minimum SIP1000
Performance wr.t. its BenchmarkConsistently beaten its benchmark NIFTY 200 TRI
Age of the Fund6 years
Expense Ratio0.79%
Exit LoadExit load is 1% if redeemed between 0 to 12 months, else 0%
TypeEquity – Multi Cap
Fund ManagerNeelesh Surana, Harshad Borawake

 Investment Objective

The investment objective of the scheme is to generate long term capital appreciation by hunting for potential investment opportunities through predominantly investing in equity and equity-related securities.

Holding Analysis

4.HDFC Small Cap Fund – Direct – Growth

The one-year returns for this fund has been in the negative territory but this was mainly because the small-cap space had felt the brunt in the recent market crash that happened.

However, over the long term, this fund has given handsome returns.

Now we are talking about investing in funds for a long term horizon (say 20 to 25 years at least). Therefore, these small cap companies which can be considered as seeds have enough time to become a full grown tree, by the time you approach retirement.

Also, a closer look at the portfolio of the fund shows that the businesses in the portfolio are good in terms of fundamentals (some of which are KEC International, SKF India Ltd., NRB Bearings Ltd., Sharda Cropchem Ltd., NIIT Technologies Ltd.).

Therefore, investors can put their money for long term (till retirement) in this fund and now is the right time as the fund has corrected last year.

Key Information:

Launch Date01 – Jan – 2013
NAV (25-Jan-2019)44.1
Plan TypeDirect
Ratings by Groww5 Star
AUM (Size)5,672 crores
Minimum SIP500
RiskometerModerately High
Performance w.r.t its benchmarkConsistently beaten the benchmark NIFTY Smallcap 100 TRI
Age of the fund6 years
Expense Ratio0.71%
Exit LoadExit load is 1% if redeemed between 0 to 12 months, else 0%
Type Small Cap
Fund ManagerChirag Setalvad

Investment Objective

The investment objective of the fund is to generate long term capital appreciation for the investors by investing in three major instruments namely:-

  • Equity and equity related instruments;
  • Money market instruments;
  • Equity Derivatives

Holding Analysis

5.UTI Nifty Index Fund – Direct – Growth

An index fund is a fund which closely follows the index. It distributes the investor’s money in stocks and sectors which are present in the Nifty Index.

Therefore, one can be rest assured that the beta or the volatility of the fund will almost be similar to that of the index.

Presence of index funds in the portfolio will bring in more stability. Many investment gurus including Warren Buffett have advised investors to follow this path of investing.

This will roughly provide the long term average return (approximately in the range 12-15 percent). Additionally, the expense ratio (0.13%) and fund size (1,076 crores) of the fund is very low.

Also, nowadays, index funds are becoming a popular fund in the investment community.

Investors would also be happy to know that index funds have been able to beat the returns generated by several large-cap funds.

Key Information 

Launch Date01 – Jan – 2013
NAV (25-Jan-2019)70.6
Plan TypeDirect
Ratings by Groww5 Star
AUM (Size)1,076 crores
RiskometerModerately High
Minimum SIP500
Performance w.r.t its benchmarkConsistently beaten its benchmark NIFTY 50 Total Return
Age of the fund6 years
Expense Ratio0.13%
Turnover0%
Exit LoadNo exit load
Type Index Fund
Fund ManagerKaushik Basu

Investment Objective

As this is an index fund, it aims to invest in stocks in S&P Index in the same weight as in the S&P Index.

Holding Analysis

Conclusion

At a current level of inflation of 5 percent and given the improvement in the standard of living, the retirement corpus we need will be really huge.

Investors should understand that the five funds discussed are not a comprehensive list. Investors might choose few funds from this list and at the same time pick other funds which suit their investment horizon and risk appetite).

Happy Investing!

Disclaimer: The views expressed in this post are that of the author and not those of Groww