Sebi's Introduction of Life Cycle Funds: A Game-Changer for Goal-Based Investing
Sebi introduces Life Cycle Funds to revolutionize goal-based investing. The funds follow a glide-path asset allocation, transitioning from equity to safer assets as they mature. Experts view this as a significant move towards disciplined, tax-efficient investment strategies, replacing less efficient, existing solutions-oriented funds.
- Country:
- India
Securities and Exchange Board of India (Sebi) has unveiled a transformational mutual fund category known as the Life Cycle Fund, aimed at refining goal-based investing strategies. Operating on a glide-path asset allocation model, these funds gradually shift from equities to safer assets like debt as they near maturity.
Industry experts such as Radhika Gupta of Edelweiss Asset Management hail these funds as a major advancement, as they streamline asset allocation in accordance with an investor's lifecycle, eliminating ongoing decision-making and enhancing tax efficiency. CEO of InCred Money, Nitin Agrawal, highlights the advantages of aligning investment risk with one's life stage.
Furthermore, Sebi has phased out the less effective Solutions-Oriented Scheme, enhancing uniformity and investor protection. The regulator is tightening disclosure norms, requiring mutual funds within the thematic equity category to limit portfolio overlaps, ensuring distinct investment strategies for enhanced transparency and investor choice.
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