Life cycle fund a major boost to goal-based investing

Metro India News | new delhi

Markets regulator SEBI’s decision to introduce a new mutual fund category — Life Cycle Fund — with a tenure ranging from 5 to 30 years has been widely welcomed by industry experts as a significant step towards strengthening goal-based investing in India.

Under the new framework, the Life Cycle Fund will be an open-ended scheme with a target date maturity. It will follow a pre-determined glide path asset allocation model, investing across equity, debt, Infrastructure Investment Trusts (InvITs), Exchange Traded Commodity Derivatives (ETCDs), and Gold and Silver ETFs. Mutual funds can launch these schemes in multiples of five years, with a minimum tenure of five years and a maximum of 30 years.

As the maturity date approaches, the fund will automatically reduce exposure to equities and gradually increase allocation to debt and safer instruments, aligning risk with the investor’s time horizon.

Radhika Gupta, MD and CEO of Edelweiss Asset Management, described the move as a “big step for goal-based investing,” stating that automatic asset rebalancing reduces the need for frequent decision-making and promotes investor discipline within a tax-efficient structure.

Nitin Agrawal, CEO of Mutual Funds at InCred Money, said the glide path approach perfectly aligns time horizon and risk profile, encouraging investors to adopt goal-oriented strategies. Niranjan Avasthi of Edelweiss Mutual Fund noted that the new category addresses limitations of traditional retirement funds by eliminating static allocation and taxation issues during fund switches.

SEBI has simultaneously discontinued solution-oriented schemes and revamped mutual fund classification norms to enhance transparency, reduce portfolio overlaps, and strengthen investor protection.