PGIM India has launched its Retirement Fund – a pure equity fund which will be run with a multicap strategy, with a 5 year lock in that is part of the construct of retirement funds.
Ajit Menon reiterates the point he has been making for years– retirement planning and retirement funds are the most important aspect of personal finances for investors as this is the only life goal for which you don’t get a loan – there is no plan B to fund your retirement if you haven’t planned sufficiently.
For distributors, retirement assets are the best as they don’t get redeemed – unlike AuM accumulated by clients for all other goals including children’s education, marriage, purchase of home etc. Not only is retirement AuM the stickiest, it is also valued the highest when MFDs look at selling their practice when they themselves retire.
Ajit acknowledges that many MFDs choose regular open ended funds for retirement plans they make for their clients, rather than opting for retirement funds. He argues that the 5 year lock in and the “retirement” branding are powerful hooks that MFDs must leverage – the former inculcates discipline while the latter is a potent mental accounting mechanism to help investors remain focused on their retirement goal irrespective of market fluctuations.
PGIM has been a thought leader in the retirement planning space with its Retirement Readiness Reports and its Retirement Readiness Certification programs for MFDs. Expect a lot more from team PGIM as Ajit passionately drives retirement planning awareness among Indian investors.