Zerodha Fund House has introduced a new category of mutual funds called Life Cycle Funds. With this launch, Zerodha has become the first asset management company in India to offer target-date maturity mutual funds.
The fund house has launched two new schemes — Zerodha Life Cycle Fund 2036 and Zerodha Life Cycle Fund 2041.
These funds are designed for investors who want to invest for specific long-term goals without worrying about changing their portfolio regularly.
Contents
Investment Strategy Changes Automatically
One of the biggest features of these funds is their automatic asset allocation.
In the early years, the fund will invest more in higher-risk assets such as equities to help generate better long-term returns. As the target year gets closer, the portfolio will gradually shift towards safer investments like debt securities.
This approach helps reduce risk as investors move closer to their financial goals.
The schemes will invest across multiple asset classes, including stocks, debt instruments, gold, and silver. This diversified approach aims to balance growth and stability over time.
Where Will the Money Be Invested?
The equity portion of the fund will track the Nifty LargeMidCap 250 Index.
For debt investments, the schemes will invest in Government of India securities with different maturity periods. The funds may also use commodities and arbitrage strategies to improve diversification.
Globally, target-date funds are extremely popular and manage more than $4 trillion in assets. These funds are commonly used for retirement planning and other long-term financial goals.
Shift Towards Goal-Based Investing
According to Zerodha Fund House, the investment industry is gradually moving from product-based investing to goal-based investing.
Vishal Jain, CEO of Zerodha Fund House, said that investors are increasingly focusing on achieving specific financial goals rather than simply choosing investment products.
The newly launched Life Cycle Funds are designed to support this trend by offering a ready-made investment solution that automatically adjusts over time.
Minimum Investment Only ₹100
Investors can start investing in these funds with as little as ₹100.
The schemes will be taxed in the same way as equity mutual funds and will not have any lock-in period.
The New Fund Offer (NFO) for both schemes opened on June 19 and will remain open for subscription until July 7, giving investors an opportunity to participate during the launch period.