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.
Additional reading: Click Here to read about what the Chinese Bamboo can teach you about equity investing
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.
Additional reading: Click Here to read about how Compounding works in mutual funds.
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:
1)
2)
3)
4)
5)
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.
