Enhanced transparency and investor protection regulations boosts investor confidence in mutual funds as retirement vehicle: ICRA Analytics
mutual funds
as a
retirement
vehicle, according to a press release by
ICRA Analytics
. The
Assets under Management
(
AUM
) of Retirement Mutual Funds increased by 226.25% over the last five years, reaching Rs 31,973 crore in June 2025, up from Rs 9,800 crore in June 2020.
Rising awareness about the importance of financial planning, the need to build a retirement corpus, higher life expectancy, and surging healthcare costs appear to be encouraging India's aging population to increasingly consider retirement-focused investment products, including mutual funds, the release added.
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A retirement mutual fund is a specialised, solution-oriented mutual fund designed to ensure that the investor enjoys a comfortable and secure post-retirement life. These funds typically have exposure to both equity and debt—where the equity segment fosters wealth appreciation, while the debt segment ensures wealth preservation and stability.
A retirement mutual fund provides a regular stream of income after retirement, when a steady monthly income may no longer exist. These funds come with a lock-in period of five years or until retirement, whichever is earlier.
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'Equity mutual funds have captured significant inflows due to optimism about market recovery and growth, which is appealing for long-term retirement portfolios. Additionally, enhanced transparency and investor protection regulations have boosted investor confidence in mutual funds as a retirement vehicle,' said Ashwini Kumar, Senior Vice President and Head – Market Data, ICRA Analytics.
The total number of
folios
under such schemes has increased by 18.21% to 30.09 lakh in June 2025, up from 25.46 lakh in June 2020. The number of schemes, which stood at 24 in June 2020, has increased to 29 in June 2025.
The average compound annualized returns on these funds stood at 6.79%, 15.72% and 14.64% for a 1-year, 3-years and 5-years period respectively.
The rise of user-friendly digital platforms and robo-advisors has made retirement investing more accessible. 'These tools offer personalized portfolio recommendations based on age, risk tolerance, and retirement goals, encouraging more participation,' Kumar added.
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Best medium duration mutual funds to invest in July 2025
It is important that one has a well-thought-out retirement plan which is in sync with his risk tolerance, investment horizon and investment objective as regular income will cease to exist post-retirement. Taking into account the higher price levels, increasing healthcare costs, increasing trend of nuclear families and higher life expectancy, retirement funds are expected to gain traction in the coming years.
ETMarkets.com
(
Disclaimer
: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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