Why invest in Solution-oriented Funds?
Since different asset classes reflect varying attributes across different periods, it becomes crucial for the investors that their investments suit the investment horizon and their financial goals. For example, equity funds, which tend to be volatile over the short term, may not be considered suitable for short term financial goals. Further, it is advised that they link their mutual fund investments with specific goals to continue saving towards their financial goals. Solution-oriented schemes aim to bridge the gap for such investment needs.
What are the different types of Solution-oriented Funds?
Following are the two types of solution-oriented mutual funds, as allowed by SEBI:
- Retirement Fund – These are retirement oriented mutual fund schemes having a lock-in period of 5 years or till retirement age, whichever is earlier.
- Children’s Fund – These funds aim for investment for children having a lock-in period of 5 years or till the child attains majority, whichever is earlier.
Who should invest in Solution-oriented Funds?
Solution-oriented schemes aim to achieve the investment objectives towards specific financial goals, which may range from retirement planning to a child’s education. As such, the investors may consider investing in such solution-oriented schemes while planning for such financial goals.
- * Disclaimer - Past performance is not a guarantee of future returns and may or may not be sustained in the future.
Solution Oriented Mutual Funds
Solution-oriented Funds are aimed at fulfilling specific financial goals of the investors, like retirement, child’s education, marriage, etc. To inculcate financial discipline and to help the investors resist the temptation of redeeming mutual funds at an early stage, such funds come with a lock-in period for at least 5 years or till the child attains age of majority or till retirement age (whichever is earlier). With clearly defined objectives for the mutual fund schemes, it becomes easier for the investors to link the investments with their financial goals.
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