Reliance Retirement Fund is an open ended scheme which is currently open for subscription and can be bought at the net asset value after the subscription is closed.
Reliance Retirement Fund NFO is an open ended scheme that plans to invest its money through two schemes. The first is the Wealth Creation Equity Plan which would generate wealth for individuals by investing bulk of the money in equities (75 per cent to 100 per cent).
There is also an income generation fund that would invest 70 to 95 per cent in debt and a small portion in equities.
Quick Features of the Reliance Retirement Fund NFO
1) Currently open for Subscription.
2) Reliance MF says that this is the first Notified Retirement Fund having Equity oriented scheme.
3) Tax Savings Under Sec 80C of the Income Tax Act up to Rs 1.5 lakhs is available.
4) Income generation can be opted for by individuals nearing their retirement age.
5) There is an exit load of 1 per cent that is applicable on redemption (sale of units) before the age of 60 years.
6) Employers can also sign up for this scheme, thus making it another unique feature.
7) Investors can opt for monthly, quarterly and annual SIP.
8) The Fund has a lock-in period of five years.
Should you Invest in the Reliance Retirement Fund NFO?
To begin with let's understand the risks involved in investing in the NFO. Under the Wealth Creation Equity Plan, it maybe noted that the fund could invest in between 75-90 per cent in equities.
Now even if they invest the bare minimum requirement of 75 per cent it is high risk. Yes, mutual funds have given stupendous returns in the last one year.
This is largely on account of the sharp rally seen after the advent of the Narendra Modi Government. Bulk of the good news is already factored into stock prices at the moment.
So, even if the fund begins investing immediately it is likely to invest at high prices. The Sensex and the Nifty are near record highs. To get superlative returns from the fund maybe little exaggerated at the moment.
The Income Generation may be a good proposition for those looking at steady returns, because bulk of the money would be invested in debt.
The one good thing is that the fund gives you tax benefit under Sec 80C of the Income Tax Act. The only hitch however is the fact that this would mean a lock-in period of 5 years.
Those who want liquidity should not invest in this fund.