NFO Alert: Zerodha Fund House launches 2 target-date Life Cycle funds

Zerodha Fund House on Friday announced the launch of its Life Cycle Fund series, becoming the first asset management company in India to introduce target-date maturity funds. The fund house is launching two schemes, Zerodha Life Cycle Fund 2036 and Zerodha Life Cycle Fund 2041.

The new fund offer (NFO) for both schemes is open for subscription and will close on July 7. The schemes will reopen for continuous sale and repurchase within five business days from the date of allotment.

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The Zerodha Life Cycle Fund series follows a simple, rule-based investing philosophy. It currently comprises two maturity variants – Zerodha Life Cycle Fund 2036, with a 10-year maturity horizon, and Zerodha Life Cycle Fund 2041, with a 15-year maturity horizon. Over time, additional schemes with varying maturity years will be introduced to cater to investors across different life stages and financial goals.

Zerodha Life Cycle Fund 2036 will be benchmarked against a composite index comprising 50% Nifty 200 TRI, 5% domestic prices of physical gold, 5% domestic prices of physical silver, and 40% CRISIL 10-Year Gilt Index. Zerodha Life Cycle Fund 2041 will be benchmarked against 65% Nifty 200 TRI, 5% domestic prices of physical gold, 5% domestic prices of physical silver, and 25% CRISIL 10-Year Gilt Index. Both schemes will be managed by Kedarnath Mirajkar.

On the equity side, the funds aim to track the Nifty LargeMidcap 250 Index. For debt exposure, they invest in Indian government securities (G-secs) across different durations, while also maintaining exposure to commodities and arbitrage strategies.

Globally, target-date funds manage assets exceeding $4 trillion and serve as the default retirement investment vehicle for millions of investors. Zerodha said it aims to bring this concept to India through a simple, transparent and goal-based structure.

“The mutual fund industry has historically been organised around products. We believe the next phase of investing will be organised around goals. Target-date funds, as a category, have transformed long-term investing globally, and we're excited to introduce something similar to Indian investors for the first time. We believe it has the potential to become the default long-term investment option for a generation of Indian investors,” said Vishal Jain, CEO of Zerodha Fund House.

The funds will be classified as equity for taxation purposes throughout their lifecycle, allowing investors to benefit from long-term capital gains tax treatment. There is no lock-in period, and investors may exit at any time, subject to applicable exit loads.

The minimum investment amount is Rs 100. At maturity, investors may either redeem their holdings or remain invested if the fund is merged with the nearest maturity Life Cycle fund, in accordance with regulations.

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“Indian mutual fund investors now have a multi-asset fund built around a finish line. You choose your target year, and the fund aims to build wealth until that date. Whether it is your child’s education, buying a home or saving for retirement, Life Cycle funds keep your asset allocation aligned with your target year,” said Vaibhav Jalan, CBO of Zerodha Fund House.

Each Life Cycle fund is structured around a specific maturity year, known as the target year, and invests across a diversified mix of equity, debt and commodities such as gold and silver.

The portfolio follows a pre-defined asset allocation path that gradually shifts from a growth-oriented (higher-risk) allocation in the early years to a more conservative (lower-risk) allocation as the target year approaches. As a result, an investor’s portfolio evolves over time automatically, without requiring any action from the investor.

(Disclaimer: The recommendations, suggestions, views and opinions expressed by experts are their own. They do not represent the views of The Economic Times)

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