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On March 26, PGIM India Mutual Fund announced the launch of its latest scheme, the PGIM India Retirement Fund. The NFO (new fund offer) is available for subscription until April 9, 2024.
Here is all you need to know about the fund.
NFO snapshot
| Fund name | PGIM India Retirement Fund |
| SEBI category | Solution-oriented scheme - Retirement fund |
| NFO period | March 26 to April 9, 2024 |
| Investment objective | To provide capital appreciation and income to investors aligned with their retirement goals by investing across equity, equity-related instruments, REITs, InvITs and fixed-income securities. |
| Where will the fund invest |
Equity and equity-related instruments: 75-100 per cent Debt securities: 0-25 per cent Unit's issues by REITs and InvITs: 0-10 per cent |
| Benchmark | S&P BSE 500 TRI |
| Fund managers | Vinay Paharia, Puneet Pal |
| Lock-in period | The fund has a compulsory lock-in period of five years or until the retirement age of 60, whichever is earlier |
| Tax treatment |
If the units are sold after one year: Gains exceeding Rs 1 lakh are taxed at 10 per cent.
If the units are sold within one year: Gains are taxed at 15 per cent |
About PGIM India Retirement Fund
The PGIM India Retirement Fund will invest in a mix of securities comprising equity, fixed income, REITs (real estate investment trusts) and InvITs (infrastructure investment trusts).
The fund will have a minimum allocation of 75 per cent to equities, which can increase to 100 per cent. The allocation to debt can be up to 25 per cent, while up to 10 per cent can be invested in the unit's issues by REITs and InvITs.
Interestingly, when it comes to equity, this fund will mimic the strategy followed by multi-cap funds , where at least 25 per cent of the money is allocated to large caps, mid caps and small caps each.
About the fund managers
The fund will be managed by Vinay Paharia and Puneet Pal.
Vinay Paharia, who joined PGIM Mutual Fund in January 2023, is currently its chief investment officer (CIO). He will be managing the equity component of the scheme. Paharia has over 20 years of experience in finance, primarily equity research and fund management.
Previously, Paharia served as Union Mutual Fund's CIO, managing assets worth Rs 7,800 crore.
Below is a summary of the three largest funds he managed at Union Mutual Fund . Encouragingly, the two of the three funds outperformed their category average during his tenure.
Vinay Paharia's performance at Union Mutual Fund
| Scheme name | Tenure | Fund's returns (%) | Category average (%) | AUM (Rs crore) |
|---|---|---|---|---|
| Union Balanced Advantage Fund | June 26, 2018 to January 24, 2023 | 9.97 | 8.53 | 1,705.38 |
| Union Flexi Cap Fund | April 03, 2018 to January 24, 2023 | 13.08 | 11.23 | 1,333.63 |
| Union Small Cap Fund | April 03, 2018 to January 24, 2023 | 12.59 | 13.35 | 711.35 |
| Note: We have considered open-ended equity funds and the three largest funds in terms of AUM. AUM is as of January 2023. | ||||
Meanwhile, Puneet Pal will oversee the scheme's debt, REITs and InvIT portions. He has worked for over two decades in the debt markets within the mutual fund space and is currently the Head of Fixed Income at the fund house.
Our take
At Value Research, we have always maintained that solution-oriented funds are no different from any other equity or hybrid mutual fund scheme. Adding the words 'retirement' or 'children' is often just a marketing gimmick. One can undoubtedly use any other mutual fund scheme to invest for these goals as long as its investment strategy aligns with one's risk appetite and investment needs.
Further, solution-oriented funds have a significant drawback in the form of a lock-in period, the time before which you cannot withdraw your money. The PGIM India Retirement Fund is no different. Having said that, the fund will predominantly invest in equities following a multi-cap strategy.
Yet, if one is keen on investing in a multi-cap fund, there already exist plenty of schemes with a reasonable track record. As we always say, one may choose among them instead of opting for a new scheme with no track record.
Also read: Ask these three questions before investing in an NFO
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