DHFL Pramerica Mutual Fund has filed papers with SEBI for a retirement fund. The fund will have a lock-in of five years or until retirement age, whichever is earlier. The SID does not explicitly state a retirement age, however this usually taken to be 60.
The fund will be benchmarked to the S&P BSE 200 Index. The fund does not explicitly state a market cap preference, but the benchmark chosen indicates a large and mid-cap oriented style.
The fund will invest 85-100% of its assets in equities and 0-15% in debt. Alok Agarwal who manages other DHFL schemes such as DHFL Hybrid Equity Fund will manage this fund. He has over 11 years of experience in the equity market.
The Fund will offer the Growth Option and Dividend Payout Option. It has a minimum investment of Rs 5000.
Retirement saving is better done through retirement-oriented products like EPF, PPF and NPS than mutual funds. Not all of these have the same risk profile and for someone who is willing to take the risk of equity investment, the NPS (Tier I) is the best option around. It now allows 75% investment in equities and has fund manager fees capped at 0.01% compared to 2-2.5% for mutual funds. NPS has a lock-in till the age of 60 rather than just 5 years, enforcing a much higher level of discipline and protecting investors from the twin impulses of greed and fear.
If you are absolutely set of mutual funds, you can go for any multi-cap fund rather than a retirement fund specifically. DHFL Pramerica as a fund house is more known for its debt funds than its equity funds. One of their relatively well-known equity funds is the DHFL Large Cap Fund. It has a three-year CAGR of 10.19% compared to the benchmark (Nifty 50) return of 12.14%. Its one year return is 6.95% compared to the benchmark return of 14.27%. It has only outperformed on a 5-year basis with a CAGR of 15.79% compared to 14.87% on the benchmark and the outperformance is marginal. It is managed by the same fund manager as the proposed retirement fund.