Mumbai, July 28 The assets under management (AUM) of retirement mutual funds have increased by 226.25 per cent in the last five years to touch Rs 31,973 crore in June 2025, up from Rs 9,800 crore in the same month a year ago, a report said on Monday.
"Enhanced transparency and investor protection regulations have helped boost investor confidence in mutual funds as a retirement vehicle," credit rating agency ICRA Analytics said in its report.
Increasing awareness about the importance of financial planning among people and the need to build a corpus for retirement, coupled with higher life expectancy and the surge in healthcare costs, seems to be encouraging the ageing populations in India to increasingly look for retirement-focused investment products, including mutual funds, the report noted.
A retirement mutual fund is a specialised solution-oriented mutual fund whose objective is to ensure that the investor has a comfortable and secure post-retirement life.
“Equity mutual funds have captured significant inflows due to optimism about market recovery and growth, which is appealing for long-term retirement portfolios," said Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics.
This apart, enhanced transparency and investor protection regulations have boosted investor confidence in mutual funds as a retirement vehicle, he added.
According to the report, the total number of folios under such schemes has increased by 18.21 per cent at 30.09 lakh in June 2025, up from 25.46 lakh in June 2020.
The number of schemes, which stood at 24 in June 2020, has increased to 29 in June 2025.
The average compound annualised returns on these funds stood at 6.79 per cent, 15.72 per cent and 14.64 per cent for a 1-year, 3-year and 5-year period, respectively, the report stated.
The retirement funds are exposed to both debt and equity; the debt segment guarantees stability and wealth preservation, while the equity segment promotes wealth appreciation.
According to the report, these funds have a five-year lock-in period or until retirement and help provide a consistent stream of income when one retires and there is no regular monthly income.
The rise of user-friendly digital platforms and robo-advisors has made retirement investing more accessible, the report highlighted.
“These tools offer personalised portfolio recommendations based on age, risk tolerance, and retirement goals, encouraging more participation,” Kumar added.
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