Union Retirement Fund NFO launched

Union Mutual Fund is coming out with a NFO in the form of Union Retirement Fund.

Union Retirement Fund would be an open – ended retirement solution oriented scheme with a lock in period of 5 years or till retirement age (whichever is earlier)

The fund would be open for subscription from September 01, 2022 to September 15, 2022.

NFO details for Union Retirement Fund

Scheme Opens	01/09/2022
Scheme Closes	15/09/2022
Fund Manager	Mr. Vinay Paharia Mr. Sanjay Bembalkar
Benchmark	S&P BSE 500 TRI
Minimum Investment	1,000
Fund Category	Solution - Retirement
Exit Load	Nil

Union Retirement Fund would be an open – ended retirement solution oriented scheme with a lock in period of 5 years or till retirement age (whichever is earlier).

Only individuals of 55 years or younger can invest in this scheme with a lock in period of 5 years or until the investor turns 60 years, whichever is earlier.

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Union Retirement Fund Investment Objectives

The investment objective of the fund is to generate long term capital gains by investing in a mix of securities comprising of equity, equity related securities & debt instruments as per the asset allocation of the scheme with a view to provide a retirement investment solution to investors.

There is no guarantee that the investment objectives of the scheme would be achieved.

Union Retirement Fund Allocation

The asset allocation for the fund would be something like this

Asset Class	Minimum %	Maximum %
Equity and Equity Related instruments of large, mid and small cap companies	65	100
Debt and money market instruments	0	35
Units issues by REITS and InvITs	0	10

The above figures are only indicative and not fixed, the fund managers have the liberty to move across the asset classes depending upon prevailing market conditions as long as they remain within the mandate permitted.

The fund can also invest in REITs and InvITs if so desired.

A nfo means a new fund from a mutual fund house which was not available earlier.

With growing acceptance of mutual funds as a form of investment, mutual fund houses periodically introduce new fund offers so as to complete their basket of investments available for investors.

A NFO is usually what results in the beginning of a mutual fund scheme.

Other reasons being merger of schemes within the same fund house or merger or acquisition of two or more fund houses, these are rare instances though.

Why you need a retirement fund?

When you retire, you stop working but don’t stop living.

Your monthly expenses will continue as they were, in fact taking into account inflation, it will only grow further.

Further when you consider rising medical inflation & expenses & growing live expectancy, a retirement fund should be your primary goal when investing if not a goal you prioritize.

You are going to grow old, it is not a voluntary choice.

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Why you must save for a retirement fund?

Inflation

Inflation is something that cannot be controlled but can only be managed. You cannot stop the rains but you can always manage it by using an umbrella, same is the case with inflation.

Inflation is a silent killer since it eats into you hard earned money gradually and not in one go. This is precisely why it becomes so difficult to detect it.

Hypothetically let’s say that a 30 year old is today spending Rs. 25,000 for his monthly expenses, 30 years when he’s retired at 60 the same 25,000 would then be 1.43 lakhs. This is when we assume the monthly expenses would be fixed when in fact they would only rise further more so when you take into account medicinal costs.

Healthcare is a non-discretionary expense, meaning it cannot be avoided.

Insufficient options

Picking the right asset class that can outperform inflation in the long run is absolutely.

If not then the growth in the value of your money is negligible or in certain cases even negative.

In a developing economy interest rates are usually high but so is inflation thereby making high interest rates a moot point since inflation is also high.

Traditional savings options liked fixed deposits and other small saving schemes are not a healthy option and inflation beating option in the long run.

Saving is not the same as investing.

Scheme	Jan-March 20 rates	April-June 20 rates
Senior Citizen Savings Scheme	8.6%	7.4%
National Savings Certificate	7.9%	6.8%
Public Provident Fund	7.9%	7.1%
Sukanya Samriddhi Yojana	8.4%	7.6%

For long term goals, you need an investment instrument that beats inflation.

Alternate option

Usually when you do not plan well or do not plan at all for a life goal like say a vacation or a house or your child’s higher education, you end up taking a loan.

The monthly emi’s eat into your savings and thereby drastically affect your overall financial situation.

It’s not a great place to be in but nonetheless the option exists.

You do not have that option with your retirement goal though.

Here’s a list of top 5 banks eager to lend to a retiree with no regular source of income:

NFO meaning

A nfo or a new fund offer is a method by which a mutual fund scheme raises the initial investment into the fund.

The new fund offer is available for purchase for a limited number of days only.

After which it becomes unavailable for fresh purchase or redemption for a couple of days.

Once this time duration is complete, the nfo no more remains a nfo and is treated like any other open ended mutual fund scheme.

In which you can invest and redeem as and when you please, considering it is an open ended fund and you comply with the necessary exit load calculations.

Should you invest in a nfo?

You can consider it if:

The new fund offer is a category of fund that is not existent in your mutual fund portfolio.

If it is going to be a part of your satellite portfolio.

If it adds a unique touch to your mutual fund portfolio.

If you understand the functioning, objectives and risks attached with the new fund offer.

The nfo mutual fund is aligned with your risk profile.

You should avoid it if:

The new fund offer is not going to add anything of unique significance to your mutual fund portfolio.

If the nfo is going to be a part of your core portfolio.

If the only reason you are investing is due to FOMO (Fear of missing out).

If you do not understand the investment style and risks attached with the nfo.

The nfo mutual fund is not aligned with your risk profile.

For portfolio enquiries, email us with your doubts at info@themutualfundguide.com

Disclaimer : While due precaution has been undertaken in the preparation of this article, The Mutual Fund Guide or any of its authors will not be held liable for any investments based on the above article. The above article should not be considered financial advice and has been published only for your perusal. Due credit has been given in case wherever required, in case you feel any part violates any rights then do get in touch with us and we shall get it duly removed.

Mutual Fund investments are subject to market risks. Please read the offer document carefully before investing