Are solution-based mutual funds good?

Henil Shah
/ Categories: MF Unlocked

As life insurance provides investment solutions with launching retirement plans, which actually are annuity plans and child plans, mutual funds have also dived in this space with their solution-based mutual funds for child’s education and retirement. But the question is whether these products are worth investing?

If we look at the average three-year, five-year and ten-year returns provided by the solution-based mutual funds dedicated to retirement then they are 8.39 per cent, 13.48 per cent and 10.92 per cent, respectively. The average three-year, five-year and ten-year returns provided by the solution-based mutual funds dedicated to retirement then they are 9 per cent, 13.75 per cent and 14.35 per cent respectively. Though the returns provided by these funds are good, there is a lock-in period attach to these. So in these mutual funds, you lack the flexibility to move from one mutual fund to the other in case you wish to do so.

While deciding where to invest it is very important to know the dynamics of the person who is investing. If the person is single and young and his risk profile is aggressive, he would be well off to invest more in mid-cap or small-cap mutual funds. On the contrary, if a person is in his middle age and has a conservative risk profile then maybe he would be better off investing more in large-cap mutual funds. So this gives investors the flexibility to invest as per their requirement and provide them with more liquidity in the absence of lock-in. So if the investor is not happy with the fund, he can move out and invest in some other mutual fund.

But it is also to be noted that there are a certain group of people who will benefit from these solution-based mutual funds. Investors who are unable to invest in a disciplined manner can opt for these solution-based mutual funds as this will make sure that you remain invested until you reach your goal.

Previous Article Ten stocks close to their 52-week low
Next Article SPARC soars 8 per cent on the back of successful research data
Rate this article:
5.0

DALAL STREET INVESTMENT JOURNAL - DEMOCRATIZING WEALTH CREATION

Principal Officer: Mr. Shashikant Singh,
Email: principalofficer@dsij.in
Tel: (+91)-20-66663800

Compliance Officer: Mr. Rajesh Padode
Email: complianceofficer@dsij.in
Tel: (+91)-20-66663800

Grievance Officer: Mr. Rajesh Padode
Email: service@dsij.in
Tel: (+91)-20-66663800

Corresponding SEBI regional/local office address- SEBI Bhavan BKC, Plot No.C4-A, 'G' Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051, Maharashtra.
Tel: +91-22-26449000 / 40459000 | Fax : +91-22-26449019-22 / 40459019-22 | E-mail : sebi@sebi.gov.in | Toll Free Investor Helpline: 1800 22 7575 | SEBI SCORES | SMARTODR