₹100 minimum investment, no lock-in: Zerodha’s new NFO brings funds that adjust risk over time

Zerodha Fund House has launched a new mutual fund category that aims to help investors align their investments with specific future goals. The fund house on Friday introduced its Life Cycle Fund series, becoming the first asset management company in India to launch target-date maturity funds.

The series currently includes two schemes — Zerodha Life Cycle Fund 2036 and Zerodha Life Cycle Fund 2041 — designed around specific maturity years and long-term financial goals.

The new fund offer (NFO) for both schemes is open for subscription and will close on July 7. The schemes will reopen for continuous sale and repurchase within five business days from the date of allotment.

Don't Miss: EPFO 3.0 may enable UPI withdrawals soon, but how will PF withdrawals be taxed?

Funds built around a target year

Life Cycle Funds are structured around a specific maturity year, also known as the target year. Investors can choose a fund based on their goal timeline, while the portfolio automatically adjusts its asset allocation as the target year approaches.

In the initial years, the fund follows a growth-focused strategy with higher exposure to equity. Over time, it gradually moves towards more conservative investments to reduce risk closer to maturity.

The two schemes launched under the series are:

• Zerodha Life Cycle Fund 2036 — with a 10-year maturity horizon
• Zerodha Life Cycle Fund 2041 — with a 15-year maturity horizon

The fund house said additional schemes with different maturity years will be introduced over time to cater to investors across various life stages and financial goals.

Portfolio includes equity, debt and commodities

The funds invest across multiple asset classes, including equity, debt, gold and silver.

On the equity side, the schemes aim to track the Nifty LargeMidcap 250 Index. For debt exposure, the funds invest in Indian government securities (G-secs) across different durations, while also maintaining exposure to commodities and arbitrage strategies.

Zerodha Life Cycle Fund 2036 will be benchmarked against a composite index comprising:

• 50% Nifty 200 TRI
• 5% domestic prices of physical gold
• 5% domestic prices of physical silver
• 40% CRISIL 10-Year Gilt Index

Zerodha Life Cycle Fund 2041 will be benchmarked against:

• 65% Nifty 200 TRI
• 5% domestic prices of physical gold
• 5% domestic prices of physical silver
• 25% CRISIL 10-Year Gilt Index

Both schemes will be managed by Kedarnath Mirajkar.

Zerodha introduces global-style investing model in India

Target-date funds are a well-established investment category globally, with assets exceeding $4 trillion. These funds are used as default retirement investment vehicles for millions of investors worldwide.

Zerodha Fund House said it aims to bring this goal-based investment approach to Indian investors through a simple and transparent structure.

"The mutual fund industry has historically been organised around products. We believe the next phase of investing will be organised around goals. Target-date funds, as a category, have transformed long-term investing globally, and we're excited to introduce something similar to Indian investors for the first time. We believe it has the potential to become the default long-term investment option for a generation of Indian investors," said Vishal Jain, CEO of Zerodha Fund House.

No lock-in period, minimum investment starts at ₹100

The funds will be classified as equity funds for taxation purposes throughout their lifecycle, allowing investors to benefit from long-term capital gains tax treatment.

There is no lock-in period, and investors can exit at any time, subject to applicable exit loads.

The minimum investment amount is ₹100.

At maturity, investors can either redeem their holdings or continue staying invested if the fund is merged with the nearest maturity Life Cycle Fund, in accordance with regulations.

"Indian mutual fund investors now have a multi-asset fund built around a finish line. You choose your target year, and the fund aims to build wealth until that date. Whether it is your child's education, buying a home or saving for retirement, Life Cycle funds keep your asset allocation aligned with your target year," said Vaibhav Jalan, CBO of Zerodha Fund House.