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Retirement, as you all know, is a vital financial goal. But in times when inflation is eating into our hard-earned money, a question that often comes to one's mind: will my retirement savings last till my final breath?
According to India Retirement Index Study 3.0, done by Max Life Insurance -- assessing how prepared India is for a healthy, peaceful, and financially independent retirement life -- 3 in 5 Indians worry that their retirement kitty will deplete in a max 10 years. 70% of Indians believe they would have to depend on family wealth and children to finance their retirement.
Against this backdrop, you have solution-oriented retirement funds that can help you address retirement, a vital goal.
Baroda BNP Paribas Mutual Fund, founded with the vision to create a positive impact on people's lives by delivering sustainable value for their investments and the mission to help investors achieve their goals, has launched Baroda BNP Paribas Retirement Fund.
It is an open-ended retirement solution-oriented scheme having a lock-in of 5 years or till retirement age (whichever is earlier).
Here's what Mr. Suresh Soni, CEO of Baroda BNP Paribas Mutual Fund said about the fund launch:
"As life expectancy increases, it becomes imperative to ensure that retirement years are spent with financial peace of mind. The fund aims to meet this need. Most investors start saving for retirement too late and that too in traditional options. We believe that given the long-term nature of investments, it is important that investors consider investing into capital market options like mutual funds, which have the potential to compound their savings at much better rates. We encourage everyone, especially the young generation, to start investing systematically today onwards and aim to secure their future."
What is the Primary Investment Objective of Baroda BNP Paribas Retirement Fund?
The primary investment objective of Baroda BNP Paribas Retirement Fund is to generate income and capital appreciation by investing in a diversified portfolio of equity and equity-related instruments and fixed-income instruments to provide a retirement solution to investors. However, there can be no assurance that the investment objective of the Scheme will be realized. The Scheme does not guarantee/indicate any returns.
How will Baroda BNP Paribas Retirement Fund Allocate its Assets?
To achieve the stated investment objective, the Scheme under normal circumstances intends to allocate a dominant portion (around 65% to 80%) of its assets in equity and equity-related instruments, some in debt & money market instruments (around 20% to 35%) and up to 10% in units of REITs & InVITs.
As regards equities, up to 50% of equity assets in equity derivative instruments as permitted under the SEBI regulations from time to time.
In the debt portfolio, securitised debt of up to 20% may be included. The other debt instruments that the Scheme may have exposure to may include Interest Rate Swaps (IRS), Interest Rate Forwards (IRFs), Interest Rate Derivate Futures, Forward Rate Agreements (FRAs) and any such other derivative instruments permitted by SEBI/RBI from time to time.
Investment in liquid schemes or schemes that invest predominantly in money market instruments/ securities will be made for funds pending deployment. A part of the net assets may be invested in the Tri-party repo on Government Securities or treasury bills or repo or in an alternative investment as may be provided by RBI. Also, the Scheme may enter repos/reverse repos as may be permitted by RBI other than repo in corporate debt securities.
Moreover, the Scheme may invest in foreign securities (including ADR / GDR) / other overseas ETFs up to 35% of the net equity assets. However, the Scheme will not invest in foreign debt securities including foreign securitized debt.
The Investment Strategy of Baroda BNP Paribas Retirement Fund
Baroda BNP Paribas Retirement Fund will be actively managed with a strategy to generate income and capital appreciation by taking advantage of diversification by investing in a mix of asset classes: equity, debt & money market instruments.
The equity portion will select stocks that have the potential to appreciate over the long term. The stocks will be across capitalisations: large-cap, mid-cap, and small-cap. Plus, there will be no sector bias while investing.
To build the portfolio, the broad factors that would be considered would be:
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Quality of business model
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Quality of Management
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Business and economic fundamentals driven by in-depth research
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Reputation and track record of management
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Long-term growth prospects
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Financial strength of the company
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Sustainable competitive advantage
By and large, the fund manager will follow a mix of top-down and bottom-up approaches to pick stocks for the portfolio.
As regards the debt portion of the portfolio, it will be invested in debt instruments and related securities of government, quasi-government, corporate issuers and money market instruments rated investment grade or higher. Herein, thus a top-down approach will be followed where the fund manager will take into account aspects such as the following:
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Interest rate view
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Term structure of interest rates
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Systemic liquidity
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RBI's monetary policy stance
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Inflation expectations
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The government's borrowing programme
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Fiscal deficit
The Scheme shall emphasize on well-managed, good quality companies with above-average growth prospectus whose securities can be purchased at a good yield and have a high-quality rating.
As an additional source of diversification, long-term capital appreciation and income generation, the Scheme may also invest in REITs and InVITs.
Baroda BNP Paribas Retirement Fund will benchmark its performance against the CRISIL Hybrid 35+65- Aggressive Index.
The Scheme will be co-managed by Mr. Pratish Krishnan, Mr. Mayank Prakash, and Mr. Miten Vora.
Mr. Pratish Krishnan is the dedicated fund manager for the equity portion. He has over 23 years of experience in equity markets covering equity research and fund management. Mr. Krishnan is a commerce graduate (B.Com) and holds a Masters in Management Studies (MMS) degree in finance.
Mr. Mayank Prakash is the dedicated fund manager for the debt portion. He is a Deputy Head - Fixed Income at Baroda BNP Paribas Asset Management India Private Limited with around 18 years of robust experience in debt fund management. Mr. Prakash is a Chartered Accountant (CA) and has an MBA from Kanpur University.
Mr. Miten Vora is the dedicated fund manager for overseas investments. He holds a PGDM with a specialization in Finance and is a commerce graduate (B.Com). Mr. Vora has an overall experience of more than 14 years.
Baroda BNP Paribas Retirement Fund may help you accumulate a retirement corpus, provided you start planning for retirement early in life (and do not wait till you cross the age of 50).
"As in all successful ventures, the foundation of a good retirement is planning." - Earl Nightingale.
Want to know how much you would require for your retirement? Use PersonalFN's Retirement Calculator.
[Read: Which Are the 4 Types of Mutual Funds to Build Your Retirement Corpus]
Also, download PersonalFN's Guide to Retire Rich with Mutual Funds.
Baroda BNP Paribas Retirement Fund is available for subscription during the New Fund Offer (NFO) period from May 8, 2024, to May 22, 2024, and has both Regular Plan and Direct Plan options for investment.
The minimum investment amount is Rs 1,000/- and in multiples of Re 1 thereafter. In the case of the Systematic Investment Plan (SIP) mode, the minimum amount and SIP instalments are as under:
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- Daily, Weekly, and Monthly SIP: Rs. 500/- and in multiples of Re. 1/- thereafter
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- Quarterly SIP: Rs. 1500/- and in multiples of Re. 1/- thereafter
To know more about Baroda BNP Paribas Retirement Fund download and read this.
Happy Investing!