Mirae Asset MF launches Life Cycle Fund 2056: How the scheme will change its equity-debt mix over 30 years

Mirae Asset Mutual Fund has launched the Mirae Asset Life Cycle Fund 2056, an open-ended scheme with a pre-determined maturity year and a mandatory glide path that will gradually change its asset allocation as the scheme approaches 2056.

The New Fund Offer (NFO) opens on September 28 and will close on October 12. The scheme will reopen for continuous subscription from October 21. The minimum initial investment during the NFO is ₹5,000, while investors can start a systematic investment plan (SIP) with ₹99 per month.

The fund will invest across equity and equity-related instruments, debt, gold, silver, InvITs and arbitrage. Its benchmark comprises Nifty 500 TRI with a 65% weight, Nifty Short Duration Debt Index at 25%, domestic prices of gold at 7.5% and domestic prices of silver at 2.5%.

How the allocation will change

The key feature of the scheme is its pre-defined glide path. The net equity allocation is expected to start at around 65-95% during the initial 15-year Growth phase.

The equity exposure will then progressively decline through Growth Moderation, Balanced and Conservation phases before reaching around 5-25% during the final three years of the Preservation phase.

Within the equity allocation, the portfolio’s large-cap exposure is also expected to increase over time. The large-cap to mid- and small-cap mix is planned to move from 50:50 in the earlier years towards an 80:20 mix as the scheme matures.

The scheme will be managed by Harshad Borawake for the equity portion, Basant Bafna for debt and Ritesh Patel for commodities.

According to Borawake, the equity allocation will be determined using a valuation-led approach, with the fund following a rules-based reduction in equity exposure as it moves towards its 2056 maturity.What happens as the maturity year approaches

Unlike a conventional equity or hybrid fund where investors decide when to reduce risk, the scheme’s investment framework provides for a gradual shift towards debt and arbitrage as the target year approaches.

The stated objective is to reduce the portfolio’s equity exposure during the later stages of the investment horizon. However, the actual returns will depend on the performance of the underlying asset classes and the fund’s investments over the period.

The scheme also has a tiered exit load. Redemptions within one year of allotment attract a 3% charge, those between one and two years attract 2%, and those between two and three years attract 1%. There is no exit load after three years.

The scheme’s investment framework may change over time in accordance with the strategy specified in its Scheme Information Document.