Radhika Gupta backs life cycle funds, says they’re simple, effective, practical for long-term planning

With the introduction of life cycle funds under the revised scheme categorisation framework, Radhika Gupta, MD and CEO, Edelweiss Mutual Fund, believes this move to be a big step for goal-based investing and calls it a simple concept, powerful in outcome and very practical for long-term financial planning.

According to Gupta, these funds are designed to automatically align asset allocation with an investor’s time horizon, which will reduce the need for constant decision-making, keep investors disciplined, and do so within a tax-efficient structure.

Also Read | Sebi introduces life cycle funds. Here is what investors need to know


She posted on social media platform X that, “The introduction of Life Cycle Funds under the new scheme categorisation framework is a big step for goal-based investing. Asset allocation automatically aligns to an investor’s time horizon, gradually moving from equity to lower-risk assets as the goal nears.”

https://x.com/iRadhikaGupta/status/2026950321633902837?s=20

While acknowledging what the market regulator has done over the years, Gupta cites debt passive regulations, Specialised Investment Funds, and now Life Cycle Funds as good examples.

She further said that these aren’t cosmetic changes; they widen the solution set. It’s genuinely one of the most exciting times to be building in this business.

The market regulator, Sebi, on Thursday introduced a new category of mutual fund schemes called life cycle funds, open-ended funds with attributes of predetermined maturity and glide path for goal-based investing.

According to the market regulator, mutual funds may launch Life Cycle Funds with a minimum tenure of five years and a maximum tenure of 30 years. Such a fund may be launched for tenures in multiples of 5 years, and a maximum of 6 funds by a mutual fund can be active for subscription at any given point in time.

Also Read | Sebi discontinues children’s and retirement fund category; revamps categorisation, rationalisation rules

The Life Cycle Funds shall follow the benchmark framework as prescribed for Multi Asset Allocation Fund. Life Cycle Funds shall include the maturity date in the nomenclature of the scheme, e.g. Life Cycle Fund 2055, Life Cycle Fund 2045, etc.

In order to inculcate financial discipline, in life cycle funds, an exit load of 3% would be chargeable on any exit by an investor within one year of investment; an exit load of 2% within the first two years of investment and 1% in the first three years of investment.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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