HDFC Retirement Savings Fund (NFO): Should You Invest In the Same?

HDFC Mutual Fund has launched a HDFC Retirement Savings Fund, which aims to provide corpus long with tax saving benefit. It is an equity-linked savings scheme (ELSS) and a pension scheme with no assured returns.

New Fund Offer (NFO) opens on February 5 and closes on February 19, 2016. The minimum application amount for purchase or switch -in of units is Rs 5000 and any amount thereafter.
Redemption proceeds will be done within 10 working days.

There three options depending on the returns and risk factor:

HDFC Retirement Savings Fund- Equity Plan

A corpus to provide for pension in the form of income to the extent of the redemption value of their holding after the age of 60 years.
Investment predominantly in equity and equity related instruments

HDFC Retirement Savings Fund- Hybrid- Equity Plan

A corpus to provide for pension in the form of income to the extent of the redemption value of their holding after the age of 60 years.
Investment predominantly in equity and equity related instruments & balance in debt and money market instruments.

HDFC Retirement Savings Fund- Hybrid- Debt Plan

A corpus to provide for pension in the form of income to the extent of the redemption value of their holding after the age of 60 years.

Investment predominantly in debt and money market instruments & balance in equity and equity related instruments.

Tax Benefits

Investment made by the eligible investor in the Scheme will qualify for income tax deduction up to Rs. 1,50,000 on fulfilment of the conditions of Section 80C of the Act, subject to the fulfilment of the relevant conditions.

Exit Load

Upon completion of lock-in period of 5 years, an exit load of 1% is payable if Units are redeemed/switched-out before completion of 60 years of age.

There will be no exit load if units are redeemed /switched-out on or after attainment of 60 years of age.

Conclusion

The returns are not assured under this scheme. The returns will depend on stock market conditions.

If you are a young investor better to go for equity mutual funds which have giver better returns in past. New Fund offers do not have record of past performance hence it is difficult to comment.

Middle age individuals who are looking for retirement plans can consider investing in retirement mutual funds or pension plans from life insurance.

There is nothing extra ordinary as far as the HDFC Retirement Savings Fund is concerned. Like most other funds, if the markets are in good shape, it could do well. At the moment with the stock markets faltering, it would not be very easy for mutual funds to garner money easily.

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