This fund can boost IFA productivity
Aditya Birla Sun Life AMC launches its Retirement Fund
NFO Period: Feb 19 – Mar 5, 2019
Close on the heels of its child savings fund launch (Bal Bhavishya Yojana), ABSL MF has now launched its Retirement Fund, to strengthen its suite of solution oriented funds. The interesting aspect of this fund is that it combines two popular and globally accepted fund categories into one – it is in a sense a retirement fund with a life stages fund bundled within.
Life stages funds are internationally very popular as they have significant intuitive appeal, which investors can readily relate to. You can start a SIP in your 30s at a pre-defined asset allocation suitable for investors in their 30s (largely equity) and then see the asset allocation automatically shift on your 40th birthday to include a sliver of debt, continue investing regularly and watch the asset allocation shift on your 50th birthday to a lot more of debt and finally get into a full debt mode when you retire, at which point of time an SWP can be set up to fund your retirement income.
This construct of a life stages fund, when complemented with a 5 year lock in that retirement funds come with, can help you offer to your clients a true “advice embedded” retirement solution. You and your client of course have the option of switching between the plans at any time or opting for different asset allocations based on individual risk profile. But what this does is to offer a clear “default” choice, which one would expect most investors to gravitate towards, and yet enjoy the benefit of a changing asset allocation as you move from one life stage to another.
Retirement assets are said to be an IFA’s best friend – they are the stickiest assets among all fund categories and they often grow to become the largest allocation within client portfolios over time. As fund houses keep innovating to offer more “advice embedded” features in their retirement solutions, distributors can look forward to scaling up long term AuM with far less of on-going advisory support compared to what they need to offer in regular open ended funds. That’s a welcome productivity booster for IFAs at a time when they need to ramp up sticky AuM to combat margin pressure.
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