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HDFC Retirement Saving Fund – Good for Investment?

HDFC Retirement Saving Fund

HDFC Mutual Fund has recently launched New Fund named “HDFC Retirement Saving Fund”. HDFC Retirement Saving Fund is an open-ended tax saving cum pension fund. The NFO is opened for subscription from 5th Feb 2016 to 19th Feb 2016. You can avail tax benefit under section 80 C for the investment made under this retirement saving fund.

HDFC Retirement Saving Fund offers three different investment schemes (1) Equity Plan (2) Hybrid Equity Plan (3) Hybrid Debt Plan. The basic objective of this fund is to accumulate a corpus for the retirement. This fund is rated as moderately high. This fund will be managed by Chirag Setalvad (Equities) and Shobhit Mehrotra (Debt). Key features of this fund are given in the following section.

HDFC Retirement Saving Fund Features 

  • HDFC Retirement Saving Fund is notified tax saving cum pension scheme with no assured returns.
  • This fund is open-ended fund with lock-in period of 5 years.
  • This fund is available with growth option only with the minimum investment of Rs 5000 and multiple of Rs 1000.
  • SIP options are monthly and quarterly with a minimum investment of Rs 500 and above.
  • One can redeem unit after completion of 5 years by paying exit load of 1%.
  • Minimum Age entry to purchase this unit is 18 years. Indian Resident, NRI and PIO can invest in this fund.
HDFC Retirement Saving Fund

Tax Benefits

  • One can avail tax benefit under section 80 C up to 1.5 Lakh for the investment made under this fund.
  • An income earned from Equity and Hybrid Equity funds will be treated as long-term capital gains which are exempt from income taxes.
  • An income earned from debt plan at the time of redemption would be taxable as per the applicable tax rates.

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Comparison of HDFC Retirement Saving Fund with others

Other Funds available in the same category are Reliance Retirement Fund Wealth creation fund, Franklin India Pension Plan, UTI Retirement Benefit Pension fund and Tata Retirement Saving fund.

Asset Allocation –

Reliance Retirement Fund is one-year-old; Equity asset allocation of Reliance Retirement Wealth creation fund is 65%-100%. Franklin Indian Pension, UTI Retirement Pension fund and Tata Retirement Saving fund is more than 3 years old fund. Equity asset allocation of Franklin and UTI is 40%, whereas for Tata Retirement Saving fund it is 94%.

Return Comparison –

Last one year return of all retirement saving fund is negative. Average returns of last 3 years is in the range of 7-9%.

HDFC Retirement Saving Fund

HDFC Retirement Saving Fund is Good for Investment?

Before making an investment in this fund, you should decide your investment objective. You are investing money for retirement corpus, wealth generation or tax saving purpose.

(1) Retirement Corpus – If your Investment objective is retirement corpus generation then, Say Big NO to HDFC Retirement Saving Equity fund. Average returns of funds in this category is 7-9%. Inflation is also growing @7%. So, if you make an investment in this fund you are just beating inflation and not generating any corpus.

As per me, a lot of established equity mutual funds are available in the market. These funds are generating very good returns in the range of 12-15% every year. So, it’s better to invest in the good mutual fund and not in NFO.

(2) Tax Saving –  If your investment objective is tax saving you can explore other better investment options like Equity link saving scheme, PPF or National pension scheme rather than making investment in this fund.

Also Read – HDFC Life Pension Super Plus – Review

Other important points to remember before investing in this fund.

  • One need to pay 1% Exit load on redemption or switch of this fund.
  • The benchmark of HDFC Retirement Saving Equity fund is Nifty 500 Index. So, fund performance is directly linked to market performance.
  • This fund is rated as moderately high.
  • Lock- in period of this fund is 5 Years, whereas under ELSS Lock-in period is 3 years only.
  • As it is NFO fund performance history is not available.

Do you think it is worth making Investment in HDFC Retirement Saving Fund?

Where you invest your money to generate retirement corpus?

Do share your views the comment section.

You can download HDFC Retirement Saving Fund Brochure here.

Shitanshu Kapadia
Shitanshu Kapadia
Hi, I am Shitanshu founder of moneyexcel.com. I am engaged in blogging & Digital Marketing for 10 years. The purpose of this blog is to share my experience, knowledge and help people in managing money. Please note that the views expressed on this Blog are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment , tax, financial advice or legal opinion. Please consult a qualified financial planner and do your own due diligence before making any investment decision.