More and more retail investors are parking their funds in retirement solution-oriented mutual funds, taking the category AUM to Rs 10,425.3 crore as of end January -- a 24.5 per cent growth over Rs 8,376.2 crore in April 2019.
Industry body Amfi attributes this rising inflows into such schemes to the robust SIP segment, which has reached an all-time high of Rs 8,532 crore by retail investors alone, and also overall mutual fund AUMs hitting an all-time high of Rs 28.18 lakh crore in January.
"Within the total mutual fund AUMs, assets under management of retirement solution-oriented schemes has grown 24.46 per cent to Rs 10,425.28 crore as of end January 2020 as against Rs 8,376.19 crore as of end April 2019," says Amfi.
Commenting on the numbers, Amfi chief executive N S Venkatesh said the growth is led by retail investors who are flocking to mutual funds in general and retirement-led schemes in particular as their awareness levels on the need for long-term investment rises.
"Steady month-on-month positive inflows during the last 10 months into retirement solutions-oriented category of schemes, is reflective of its enhanced awareness," he said.
Retirement-oriented schemes are typically open-ended, with lock-in period of five years or till the retirement age, whichever is earlier.
As of January end, such schemes had 25.42 lakh folios in 24 funds, compared to 24.97 lakh at the end of April 2019 in 21 such schemes. Retail investors are putting in around Rs 8,532 crore every month through SIPs and average of Rs 200 crore every month into such funds.
According to him, retirement schemes are best suited to deliver long-term returns through systematic investment availing a mix of equity and debt schemes. Increasingly, retirement schemes are being preferred alongside PPF and other traditional debt-oriented avenues.
Increasing longevity and the need to make large pool of financial corpus, is driving people to park their funds with market-linked mutual fund schemes, Venkatesh said.
Meanwhile, the average AUM of overnight mutual fund schemes has grown five times over the past 10 months to Rs 52,524.98 crore in January from Rs 11,566.84 crore in April 2019, taking the folios of overnight funds to 46,763 from 21,363 during the reporting period.