SBI Retirement Benefit Fund NFO
SBI Mutual Fund has recently announced to offer a completely new retirement solution fund named as SBI Retirement Benefit Fund. According to SBI MF, the NFO will be available to the public for subscription from 20.01.2021 to 03.02.2021.
Retirement planning has always been a crucial investment decision in India over the decades. Indians are not well prepared when it comes to planning for retirement.
Sometimes, it seems very complicated like what should be the ideal asset allocation for retirement corpus, whether one should go for equities or debts or a mix of both. These questions keep on moving in everybody’s mind while planning for one’s retirement.
Therefore, there comes the importance of SBI Retirement Benefit Fund. I hope the SBI Retirement Benefit Fund Review would help you out in deciding whether it is worth investing or just old wine in a new bottle.
The SBI Retirement Benefit Fund is a complete retirement solution launched by SBI MF, keeping in mind the opportunity in this particular sector. Still, there are many people who after retirement fully depend on the Provident Fund corpus only and though not sufficient with the increase in life expectancy.
There comes this kind of goal-oriented direct retirement solution plan handy. That takes care of both your age and risk profile with the right mix of equity and debt.
What is SBI Retirement Benefit Fund NFO 2021?
| SBI Retirement Benefit Fund NFO 2021 details |
| NFO Started | 20th January 2021 |
| NFO Closes | 3rd February 2021 |
| Scheme reopens for continuous purchase/sale | Within 5 days from allotment |
| Scheme plans | 4 plans based on risks |
| Lock-in period | 5 years or 65 years of age |
| Minimum Lumpsump investment | ₹5,000 |
| Minimum SIP investment | ₹1,000 for 6 months |
| NAV of the scheme | ₹10 during NFO period |
| Entry Load | Nil |
| Exit Load | Nil |
| Risk | Moderate to High Risk |
| Total expense ratio (TER) | Up to 2.25% |
Objective of this Fund: SBI Retirement Benefit Fund is an open-ended Equity Mutual Fund Scheme. This is a comprehensive retirement solution and comes with 4 different plans based on individuals’ risks bearing abilities.
The main objective of this fund is long term wealth creation for retirement by investing in diversified asset classes. This retirement fund has been designed keeping in mind the risk profile of the investors of different ages.
SBI MF has ensured that investors of different risk categories such as moderate to high are able to understand the underlying risks of this product and invest in this fund as per their own risk bearing capacities.
SBI retirement Benefit Fund offers 4 different plans as per different risk categories :
- SBI Retirement Benefit Fund – Aggressive(80-100% in equities)
- SBI Retirement Benefit Fund – Aggressive Hybrid(65-80% in equities)
- SBI Retirement Benefit Fund – Conservative Hybrid(10-40% in equities)
- SBI Retirement Benefit Fund – Conservative (Up to 20% in equities)
Key Features of SBI Retirement Benefit Fund
This retirement benefit fund is loaded with the following features that you must consider while making any investment decisions:
- Comprehensive retirement plan: This scheme is a comprehensive solution based retirement plan with a diversified portfolio;
- 4 different options: This scheme offers 4 different plans according to risk profiles, age and different asset classes;
- Growth stocks: 50% of the total equity exposure for each plan will be invested in growth stocks and following the Buy & Hold strategy for generating substantial alpha returns;
- Lock-in period: This fund has a lock-in period of 5 years or retirement age of 65 years whichever is earlier;
- Minimum investment: The minimum permissible investment in this fund is ₹5,000;
- Systematic investment plan(SIP): This fund offers SIP option on daily(500), monthly(1000), quarterly(1500), semi-annually(3000) and annually(5000) basis.
- Multiple asset classes: This fund aims to invest in multiple asset classes such as equities, debts, money market instruments, Gold ETFs, Real estate investment trusts (REITs) or Infrastructure Investment Trust (InvITs), foreign securities.
- ₹50 Lakhs insurance coverage: This fund not only builds your retirement corpus but also brings one unique feature called SIP Insure. Here, one can enjoy life insurance coverage, if opted for, maximum 100 times of the monthly SIP amount subject to a maximum of ₹50 Lakhs.
- Auto Transfer Plan: Like the NPS, this fund allows you for Auto Transfer Plan option. This means you can switch to another conservative fund option as you grow older;
- No 80C deductions: Though this fund has a mandatory lock-in period of 5 years, investment in this fund is not tax-deductible U/S 80C of I.T Act, unlike the NPS tier-I investment.
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SBI Retirement Benefit Fund Review
SBI Retirement Benefit Fund comes with 4 different plans based on different investment and risk categories. Let’s look at these options below:
| Plan Name | Risk Level | Asset Allocation | Benchmark |
| 1. SBI Retirement Benefit Fund – Aggressive | Very High | 80-100% in equities | S&P BSE 500 TRI |
| 2. SBI Retirement Benefit Fund – Aggressive Hybrid | High | 65-80% in equities | CRISIL Hybrid 35+65 -Aggressive Index |
| 3. SBI Retirement Benefit Fund – Conservative Hybrid | Moderately High | 10-40% in equities | CRISIL Hybrid 65+35 – Conservative Index |
| 4. SBI Retirement Benefit Fund – Conservative | Moderate | Up to 20% in equities | NIFTY Composite Debt Index |
What is the asset allocation for SBI Retirement Benefit Fund?
The fund has been aiming to maintain an allocation to different instruments as per the risk grade.
1. Aggressive Plan asset allocation
| Financial instruments | Minimum | Maximum | Risk Profile |
| Equity & Equity Related Instruments | 80% | 100% | High |
| Debt and Money Market Instruments | 0% | 20% | Low to Moderate |
| Units of REITs and InvITs | 0% | 10% | Medium to High |
| Gold ETFs | 0% | 20% | Medium to High |
2. Aggressive Hybrid Plan asset allocation
| Financial instruments | Minimum | Maximum | Risk Profile |
| Equity & Equity Related Instruments | 65% | 80% | High |
| Debt and Money Market Instruments | 0% | 35% | Low to Moderate |
| Units of REITs and InvITs | 0% | 10% | Medium to High |
| Gold ETFs | 0% | 20% | Medium to High |
3. Conservative Hybrid Plan asset allocation
| Financial instruments | Minimum | Maximum | Risk Profile |
| Equity & Equity Related Instruments | 10% | 40% | High |
| Debt and Money Market Instruments | 60% | 90% | Low to Moderate |
| Units of REITs and InvITs | 0% | 10% | Medium to High |
| Gold ETFs | 0% | 20% | Medium to High |
4. Conservative Plan asset allocation
| Financial instruments | Minimum | Maximum | Risk Profile |
| Equity & Equity Related Instruments | 0% | 20% | High |
| Debt and Money Market Instruments | 80% | 100% | Low to Moderate |
| Units of REITs and InvITs | 0% | 10% | Medium to High |
| Gold ETFs | 0% | 20% | Medium to High |
Pros and Cons of SBI Retirement Benefit Fund
SBI Retirement Benefit Fund-Pros & Cons
Pros
- A comprehensive retirement oriented fund;
- One can choose any plans according to his risk profile, age and investment tenure;
- Diversified asset allocation across various plans;
- This fund invests in different financial instruments like equity, hybrid and debt, REITs, gold and foreign securities to generate higher returns as per its risk grade;
- Mandatory lock-in period that helps to build a sizeable corpus for the retirement;
- Higher expected return than fixed deposits due to balanced exposures in equities;
- 50% of the equity exposure for each plan will be invested in growth stocks and following the Buy & Hold approach;
- Availability of Auto Transfer Plan option to opt for less equity exposure with the increase in age;
- Offers life insurance coverage through SIP Insure mode;
- No entry loads and exit loads;
- Insurance charges are not deducted from the investment amount;
- Maximum insurance coverage is ₹50 Lakhs.
Cons
- No previous track record as NFO is not over yet;
- Tough competition with New Pension Scheme or NPS that has established track records;
- No 80C tax benefits, unlike NPS. This is a strong weak point of this fund;
- There are already some retirement benefit funds that offer income tax benefits to the investors;
- Switching to various options for lesser equity and higher debt allocation with increasing age attract long term capital gain tax;
- NPS is now a completely tax-free retirement plan. At maturity, one can withdraw 60% of the accumulated corpus without any capital gain tax and with balance 40% amount, one has to purchase annuity plans.
- Not tax effective at all. Like neither the investment nor the accumulated corpus is tax free;
- The returns are neither guaranteed nor possible to do so.
- Returns may be compared with a large-cap mutual fund over a tenure of 10 years.
Whether one should invest in SBI Retirement Benefit Fund NFO?
It depends. Ideally, it depends on which type of investors are investing in this fund. This fund is not absolutely suitable for investors below 40 years of age.
Investors still having 20 years remaining for retirement, should no way invest in this fund. Those who can manage to invest through SIP mode on regular basis rather chose any diversified multi-cap mutual funds with lower risk appetite.
Investors with little higher risk appetite can certainly go for some well-managed midcap and small-cap funds with 60-40 allocation or even a diversified equity fund over a period of 15 to 20 years tenure to generate substantial returns and constitute a sizeable retirement corpus.
On the other hand, this fund is an ideal investment option for those investors who are still reluctant to take risks over a long period of time or who are completely risk-averse but want little bit higher return than fixed deposits.
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