SEBI launches Life Cycle Funds with glide path investing across equity, debt and ETFs for goal-based financial planning.
New Delhi: The Securities and Exchange Board of India (SEBI) has introduced a new mutual fund category called Life Cycle Funds, designed for goal-based investing through a predefined glide path strategy across multiple asset classes.
The new open-ended schemes will feature a predetermined maturity and automatic asset allocation shifts aligned with an investor’s time horizon. Life Cycle Funds will invest across equity, debt, InvITs, exchange-traded commodity derivatives (ETCDs), and gold and silver ETFs.
The move comes alongside SEBI’s decision to discontinue the existing solution-oriented fund category, which included retirement funds and children’s funds.
Tenure and structure of Life Cycle Funds
Mutual funds can launch Life Cycle Funds with a minimum tenure of five years and a maximum tenure of 30 years. Schemes may be introduced in multiples of five years — such as 5, 10, 15, 20, 25 or 30 years — with a maximum of six such funds open for subscription at any given time per fund house.
As a scheme approaches maturity and has less than one year remaining, it may be merged with the nearest maturity Life Cycle Fund, subject to positive consent from unitholders.
Each scheme must include its maturity year in the name, such as “Life Cycle Fund 2045” or “Life Cycle Fund 2055”.
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Glide path-based asset allocation
Under the glide path framework, asset allocation will gradually shift from higher exposure to equity in the early years to lower-risk assets such as debt and other instruments as the maturity date approaches.
For schemes with less than five years to maturity, equity arbitrage exposure of up to 50% will be permitted in addition to the specified equity allocation, provided total exposure to equity and equity-related instruments remains within 65% to 75%.
Life Cycle Funds will follow the benchmark framework applicable to Multi-Asset Allocation Funds.
Exit load structure to encourage long-term investing
To promote financial discipline and long-term participation, SEBI has prescribed a graded exit load structure. Investors exiting within one year of investment will incur a 3% exit load, 2% if redeemed within two years, and 1% if redeemed within three years.
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Replacement of solution-oriented funds
SEBI has discontinued the solution-oriented schemes category with immediate effect. Existing retirement and children’s funds will stop accepting fresh subscriptions and must be merged with other schemes having similar asset allocation and risk profiles, subject to SEBI approval.
Market participants say the introduction of Life Cycle Funds aims to address behavioural challenges faced by retail investors, particularly around portfolio rebalancing and asset allocation decisions.
Industry executives have described the move as a structural reform in goal-based mutual fund investing, noting that automatic asset allocation aligned with an investor’s life stage could reduce emotional decision-making and improve long-term financial planning outcomes.
The introduction of Life Cycle Funds marks a significant regulatory shift in India’s mutual fund landscape, with a focus on disciplined investing, risk alignment and tax-efficient portfolio management.
Published: 27 Feb 2026, 12:50 pm IST
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