PGIM India Mutual Fund has introduced a new investment option to help people save for their golden years. The PGIM India Retirement Fund is an open-ended scheme having a five-year lock-in term or until retirement age of 60 (whichever occurs first). This means you can't withdraw your money for at least five years, which motivates you to stick to your savings goals.

The lock-in term also applies when an investor transfers from the PGIM India Retirement Fund to any other scheme within the fund house before the obligatory lock-in period of 5 years or retirement age, whichever occurs first.

How does the fund work?

The fund invests in a variety of assets such as stocks, bonds, and real estate investment trusts (REITs). Diversification helps to disperse risk and potentially improves long-term results. The fund managers choose companies with strong growth prospects and solid business concepts.

Key Information regarding the Fund

1. Subscriptions will be available beginning March 26, 2024, and ending April 9, 2024.

2. Invests in a variety of equities, bonds, and REITs.

3. Minimum investment is Rs 5,000, with incremental investments of Rs 1,000 or more.

4. A five-year lock-in period or retirement age (whichever comes first).

5. The PGIM India Retirement Fund will be benchmarked against the S&P BSE 500 Index TRI (Total Returns Index) and has no exit load (withdrawal charge).

6. The portfolio is supposed to allocate at least 25% to the large size, midcap, and small cap divisions of the market, accordingly.

"There is a continuing opportunity for investing in high growth and good quality Large and Mid-Cap companies which can take advantage of the India growth story. Such companies can continue to compound capital at a rapid pace in a capital-efficient manner for a long period of time. Thus, a diversified portfolio of high growth and good quality stocks can help build a robust retirement corpus,” said Vinay Paharia, CIO, PGIM India Mutual Fund.

Minimum Application Amount:

The first purchase/switch-in fee is Rs. 5,000/-, followed by Re. 1/- increments afterward.

Additional Purchase - A minimum of Rs. 1,000/- and subsequent multiples of Re. 1/-.

For SIPs, the minimum number of installments is five, and the minimum amount each installment is Rs. 1,000/-, with subsequent multiples of Rs.1/-.

Why should I choose this fund?

Goal-Oriented: This fund is specifically created for retirement planning, allowing you to remain focused on your long-term objectives.

Professional Management: Your money will be managed by experienced fund managers, allowing you to focus on other things. Long-Term Growth: Investing in stocks has the potential to provide higher returns over time, allowing you to construct a larger retirement portfolio.

"Living longer is an underappreciated risk into retirement and leaves everyone grappling to find solutions. Most of our life goals such as home, education, car, can be fulfilled with a conventional loan but when it comes to retirement, we can’t fund it with a loan. Thus, people need to prioritise building their retirement corpus. Having a trusted financial advisor to help you plan your investments with a goal-based approach is advisable. Investing in a dedicated fund earmarked for retirement also helps in staying committed longer towards your goal and benefit from long term compounding," said Ajit Menon, CEO, PGIM India Mutual Fund.

Vinay Paharia will manage the equity portion of the fund, while Puneet Pal will handle the debt, REITs, and InVITs.

The fund will largely use a bottom-up method to discover companies with strong management and growth potential, as well as a top-down approach for macroeconomic and thematic analysis. The fund managers would choose companies with stable or high growth rates, taking valuation into consideration. 

The fund managers would consider a variety of quantitative and qualitative factors, including the company's business prospects, historical and current financial condition, capital allocation efficiency, operating cash flows, leverage position, valuation metrics, competitive advantage, brand equity, management strength, and good corporate governance practices, among others. The scheme may also invest in turnaround companies based on the fund manager's recommendations.