With mutual funds now allowed to launch pension-based schemes that aim to help you save for retirement and which also qualify to give tax deduction benefits under section 80C of the Income-tax Act, 1961, HDFC Asset Management Co. Ltd has launched a new scheme.
WHAT IS IT?
Under the retirement scheme, you have three plans to choose from: an equity plan, a hybrid equity plan and a hybrid debt plan. The equity plan is a full fledged equity scheme that will invest up to 100% in equity. The hybrid-equity plan will invest 60-80% in equities and the rest in fixed income securities, and the hybrid-debt plan will invest 5-30% in equities and the rest in fixed income securities.
All three will offer section 80C tax deduction benefits and come with a five-year lock in. Over and above the lock-in, there is an exit load if you redeem before you attain the age of 60.
WHAT WORKS...
The fund managers come with a good track record. Chirag Setalvad, who will manage the equity component, also manages the successful HDFC Midcap Opportunities Fund. Setalvad will, however, use a multi-cap strategy and will invest in scrips and sectors across market capitalisation. Given that such schemes run with a limited corpus, he will run a concentrated equity portfolio. For the fixed income portion, fund manager Shobhit Mehrotra will stick to high credit rated securities and will invest in a mix of government securities and corporate bonds. A small portion may be kept aside for any credit opportunities as and when there is merit in them.
