SEBI Allows Retirement, Children's Funds to Continue: Will They Scale Up?

• SEBI's March 20 Master Circular permits the continuation of retirement and children's mutual funds, reversing an earlier decision to phase them out.
• These solution-oriented funds, introduced in 2017, have lock-ins and predefined asset allocation for long-term goals like retirement or education.
• Despite conceptual appeal, the category remains modest with Rs 70,000 crore AUM across 40 schemes, facing challenges like lock-in discomfort and competition from insurance products.
• AMCs continuing these funds face restrictions on launching certain Life Cycle Funds, while those discontinuing can offer a full range of Life Cycle Funds.
• Experts suggest Life Cycle Funds, with their glide path and flexibility, could attract more investors than the current solution-oriented funds.