Bandhan Mutual Fund (formerly IDFC Mutual Fund) announced the launch of the Bandhan Retirement Fund, an open-ended equity-oriented retirement fund scheme having a lock-in of five years or till retirement age, whichever is earlier.
The scheme opened for public subscription on September 28, 2023, and will close on October 12, 2023. The scheme re-opens for ongoing subscription and redemption within five business days from the date of allotment of units.
What kind of mutual fund scheme is this?
This is an open-ended retirement solution-oriented scheme having a lock-in of five years or till retirement age, whichever is earlier.
- The Bandhan Retirement Fund follows a dynamic asset allocation strategy (just like a Balanced Advantage Fund).
- The equity exposure in this fund will vary between 30% and 100% and hence equity taxation will apply. The maximum debt exposure will be 35%.
- Exposure to equity and debt will be driven by an underlying model unique to Bandhan AMC.
- To summarize, this is an equity-oriented mutual fund that has the capability to manage equity and debt exposure and has a lock-in of five years.
What is the main objective of investing in this fund?
The investment objective of the scheme is to provide long-term capital appreciation/income by investing in a mix of equity, debt, and other instruments to help investors meet their retirement goals. However, there can be no assurance that the investment objective of the scheme will be realized.
How may one invest in this scheme?
Investors can invest under the scheme with a minimum investment of ₹1000 per plan/option and in multiples of Re 1. There is no upper limit for investment.
Under normal circumstances, the asset allocation of the scheme will be as follows:
| Instruments | Indicative allocations (% of total assets) | Risk Profile | |
Minimum | Maximum | ||
Equity and Equity-related Instruments | 50% | 100% | Very High |
Debt Securities and Money Market Instruments (including Government securities, Securitised debt) | 0% | 50% | Low to Moderate |
Units issued by REITs & InvITs | 0% | 10% | Very High |
Are there similar mutual funds in the market?
To date, many asset management companies (AMCs) have launched such retirement funds, thus, allowing inclined investors to avail of returns corresponding to the total returns of the securities in this particular index. These include:
Mutual Fund House | Name of the Fund |
TATA Mutual Fund | Tata Retirement Savings Fund |
SBI Mutual Fund | SBI Retirement Benefit Fund |
Nippon Mutual Fund | Nippon India Retirement Fund - Income Generation Scheme |
Tata Mutual Fund | Tata Retirement Savings Fund - Conservative Plan |
UTI Mutual Fund | UTI Retirement Benefit Pension Fund |
Aditya Birla Sun Life Mutual Fund | Aditya Birla Sun Life Retirement Fund |
ICICI Prudential Mutual Fund | ICICI Prudential Retirement Fund |
HDFC Mutual Fund | HDFC Retirement Savings Fund - Hybrid-Debt Plan |
Union Mutual Fund | Union Retirement Fund |
Axis Mutual Fund | Axis Retirement Savings Fund |
| Source: AMFI | |
How will the scheme benchmark its performance?
The CRISIL Hybrid 50+50 – Moderate Index will be the benchmark for the Bandhan Retirement Fund.
Since the scheme intends to run a blend of equity and debt allocation, the CRISIL Hybrid 50+50 – Moderate Index is the appropriate benchmark for this scheme. The benchmark is a hybrid portfolio having a blend of S&P BSE 200 (50%) and the CRISIL Composite Bond Fund Index (50%).
The fund will dynamically manage its allocation between equity and debt by hedging its equity allocation using derivatives. Hence, the net equity allocation of the fund shall move up or down based on our quantitative model. The net equity allocation of the scheme can go to a low of 30% and a high of 100%. Our understanding is that the fund over a period of time will have an average net allocation of 50% towards equity. Therefore, we have proposed a moderate hybrid index (CRISIL Hybrid 50-50 moderate index) with 50:50 allocation between equity and debt 43 as the benchmark as we believe it will be most suitable to measure the performance of this scheme.
Are there any entry or exit loads to this scheme?
This scheme involves no “Entry Load”, which means that investors do not have to pay anything to park their earnings in this scheme. The “Exit Load” would also be “Nil”.
Who will manage this scheme?
Viraj Kulkarni will be looking into the equity investments of this scheme while Gautam Kaul will be evaluating the debt investments in this scheme. Nishita Shah will be taking care of the overseas investment portion.
Does the fund contain any inherent risk?
The scheme involves “Very High Risk” as per the details mentioned in the Scheme Information Document and is best suited to investors willing to understand that their principal will be subject to very high risk only. However, investors should consult their financial advisors if they doubt whether the product is suitable for them.
