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Young India increasingly looking to MF for retirement corpus: AMFI

Our Bureau Mumbai | Updated on February 21, 2020 Published on February 21, 2020

AUM of retirement-oriented schemes rises 24% to ₹10,425 crore in last 10 months

Young India seems to be saving big time for retirement, and mutual fund schemes are emerging as the popular long-term retirement avenue.

The assets under management (AUM) of retirement solution-oriented mutual fund schemes saw a 24 per cent increase to ₹10,425.28 crore as of January-end, against the ₹8,376 crore logged in as of April-end.

The strong mop-up under retirement schemes comes even as inflow systematic investment plans (SIP) and average assets under management (AUM) touched an all-time high of ₹8,532 crore and ₹28.18-lakh crore, respectively.

Retail investors are pumping in an average of ₹200 crore every month in solution-oriented retirement MF schemes.

Rising awareness

NS Venkatesh, Chief Executive of the Association of Mutual Funds of India (AMFI), said that with increasing awareness, the affinity of retail investors towards MF schemes as a whole, and retirement-led solutions in particular, is rising. Retail investors are increasingly warming up to the long-term orientation of the MF investment horizon, he added.

The steady month-on-month positive inflows over the past 10 months into the retirement solutions-oriented category of schemes is reflective of enhanced awareness, he further said.

Retirement-oriented MF schemes are typically open ended, with a lock-in of five years or till the retirement age, whichever is earlier.

As on January 31, 2020, retirement solution-oriented schemes had 25.42 lakh folios in 24 retirement funds, against 24.97 lakh in 21 solutions-oriented schemes as on April 30, 2019. Retail investors are putting in about ₹8,532 crore every month through SIPs.

Long-term returns

Retirement MF schemes are best suited to deliver long-term returns through systematic investment, availing a mix of equity and debt schemes. Increasingly, such schemes are being preferred alongside PPF and other traditional debt-oriented avenues, said Venkatesh.

Increasing longevity and the need to build a large pool of financial corpus are encouraging individuals to turn to market-linked MF schemes, he said. Individuals have realised that allocating funds every month towards MF schemes which have a longer term objective of 25 to 30 years would be far more financially beneficial, he added.

Published on February 21, 2020
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