The market regulator SEBI has introduced a new category of mutual funds called Life Cycle Funds.
Experts say this is a timely move, as many investors struggle with knowing when and how to rebalance their portfolios for long-term goals.
What Are Life Cycle Funds?
Life Cycle Funds are designed for long-term, goal-based investing.
Each fund has a specific maturity period, usually ranging from five to thirty years, which aligns with milestones like retirement or a child’s education.
According to Charu Pahuja, CFP, Group Director at Wise Finserv, these funds connect investing with real-life goals.
Here’s how they work:
In the early years, the portfolio is weighted more toward equities to maximize growth.
As the investor nears the goal, the fund gradually shifts toward debt and safer instruments to preserve capital.
This adjustment happens automatically, so investors don’t need to manually rebalance their portfolios.
Hemant Sood, Managing Director at Findoc, explains that this approach is systematic and reduces risk as you approach your financial milestone.
Who Should Consider Life Cycle Funds?
Life Cycle Funds are ideal for investors looking for long-term, structured investment options without constant monitoring.
Each fund has a specific maturity year, such as 2045 or 2050, making it easy to match with personal goals.
The funds offer a glide-path approach, professionally managing risk and reducing behavioral mistakes.
For investors who want discipline and clarity, these funds provide a practical, worry-free solution for reaching long-term financial goals.
In short, Life Cycle Funds bring structure, professional management, and goal alignment to long-term investing, helping investors grow and protect their wealth efficiently over time.
