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A Comprehensive Guide To Solution-Oriented Mutual Funds In India

In the ever-evolving landscape of investment opportunities, solution-oriented mutual funds have emerged as a tailored approach to financial planning, specifically addressing individual objectives such as retirement, education, and marriage. Managed by skilled fund managers, these funds provide investors with a flexible and goal-oriented investment strategy within the mutual fund realm.

What are Solution-Oriented Mutual Funds?

Solution-oriented mutual funds are designed to offer specific solutions to well-defined financial objectives. In India, these funds are categorized by the Securities Exchange Board of India as part of the broader mutual fund classifications, which include equity funds, debt funds, balanced hybrid portfolios, solution-oriented funds, and others.

Types of Solution-Oriented Mutual Funds

  1. Retirement Planning Mutual Fund: The Retirement Planning Mutual Fund is a strategic investment vehicle that combines equity and debt securities to create a balanced portfolio. Its primary objective is to cultivate a substantial corpus tailored specifically for retirement planning. Notably, this mutual fund may incorporate a lock-in period, emphasizing a commitment to fostering long-term investments. This distinctive feature encourages investors to adopt a patient and strategic approach, aligning with the fund’s overarching goal of providing financial security during retirement.
  2. Children’s Gift Mutual Fund: The Children’s Gift Mutual Fund is designed to invest in a diverse range of equity and debt securities, creating a well-rounded portfolio. The fund’s primary objective is to accumulate a substantial corpus intended to cater to various future needs of children, including education and marriage. Additionally, investors should be aware that this mutual fund may involve a lock-in period, indicating a commitment to a long-term investment approach for optimal results.

Nature of Solution-Oriented Funds

Solution-oriented funds can be further classified based on their asset allocation into equity funds, debt funds, and hybrid funds. Each category offers a distinct risk-return profile, allowing investors to choose based on their risk preferences and financial goals.

Advantages of Solution-Oriented Schemes

  • Adequate Financial Planning: Helps investors plan for specific financial goals and allocate funds accordingly.
  • Limited Risks: Follows a predetermined investment strategy, minimizing the likelihood of incorrect decisions. Solutions with exposure to debt securities pose limited risk compared to those heavily invested in equity.
  • High Yields: Potential to generate higher returns than traditional savings instruments in the long term.

Limitations of Solution-Oriented Schemes

  • Passive Management: Fixed investment mandate limits active management and dynamic asset allocation.
  • Closed-Ended Structure: A fixed maturity period restricts fresh investments or redemptions during that period.
  • Liquidity Concerns: A lock-in period may result in low liquidity.

When to Start Investing in this Scheme

The best time to start investing is as early as possible. For retirement planning, start as soon as one begins earning, gradually increasing contributions. For children’s planning, start when a child is born and continue until adulthood.

Things to Remember Before Investing

Before investing, define your financial goals—be it education, marriage, or retirement. Understand the lock-in period and evaluate your risk tolerance. Research fund managers for a track record check and consider diversification for risk mitigation. Review past performance, check expenses, and align your investment horizon with goals. Grasp the tax implications, and if needed, seek professional advice. These steps ensure a prudent and well-informed investment approach.

Best Funds to Invest in 2024

Fund Name

AUMs Rs Cr 1-Yr Return %

3-Yrs Return %

ICICI Pru Retirement Fund Pure Equity Plan 484.12 50.10 26.40
Nippon India Retirement Fund Wealth Creating Scheme 2,899.03 39.40 19.90
ICICI Pru Retirement Fund Hybrid Aggressive Plan 283.73 40.90 18.40
ICICI Prudential Childcare Fund Gift Plan 1,139.02 36.80 17.90
SBI Magnum Children’s Benefit Fund 106.41 18.70 12.90



Solution-oriented mutual funds present a smart and convenient way to achieve long-term financial goals. While offering tailor-made solutions, investors must carefully evaluate their risk appetite, return expectations, and tax implications. Regular monitoring and seeking professional advice ensure that these funds fit seamlessly into an individual’s overall financial plan. By navigating the intricacies of solution-oriented schemes, investors can pave the way toward a financially secure future.

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