Feb 05, 2016

NFO Note

RETAIL RESEARCH

HDFC Retirement Savings Fund

Prologue: HDFC Mutual Fund has launched a New Fund named HDFC Retirement Savings Fund, an open ended tax savings cum pension fund. The NFO has opened for subscription on Feb 05, 2016 and
closes on Feb 19, 2016.
A Notified Pension Scheme by CBDT: The Central Government has specified HDFC Retirement Savings Fund as a Notified Pension Fund. The Scheme is approved by Central Board of Direct Taxes,
Ministry of Finance under Section 80C(2)(xiv) of the Income-tax Act, 1961 vide Notification No. 91/2015/F. No. 178/21/2014-ITA-I dated December 08, 2015. The investments made in the Scheme will
be eligible for tax benefit under Section 80C of the Income-tax Act, 1961 for the assessment year 2016-17 and subsequent assessment years.
Lock-in: Hence the units of the fund are subject to a lock-in of 5 years from the date of allotment. The units purchased cannot be redeemed / switched out / assigned / transferred / pledged until
completion of 5 years of lock-in period, from the date of allotment.
Investment objective: The investment objective of the Investment Plans offered under the Scheme is to generate a corpus to provide for pension to an investor in the form of income to the extent of
the redemption value of their holding after the age of 60 years by investing in a mix of securities comprising of equity, equity-related instruments and/or Debt/Money Market Instruments. However
these units can be redeemed, if the investor so desires, after the end of lock-in period i.e. five years from date of allotment.
Different plans in the fund: The Scheme offers investors three Investment Plans:
(i) Equity Plan.
(ii) Hybrid-Equity Plan.
(iii) Hybrid-Debt Plan.
Each of the investment plan(s) will be managed as separate portfolios.

Basic and Investment details of HDFC Retirement Savings Fund:

Name of Fund

HDFC Retirement Savings Fund

Nature of Fund

Open ended funds with the lock-in of 5 years

Type of the Scheme

A notified Tax Savings Cum Pension Scheme with no assured returns

Tax Benefit

U/s 80C of the Income-tax, 1961 upto Rs. 1.5 lakh

Fund Manager

Chirag Setalvad (Equities), Shobhit Mehrotra (Debt) and Rakesh Vyas (Overseas Investment)

Investment Option

Growth option only

Minimum investment (Lump sum)

Rs. 5,000 and multiple of Rs. 1,000

SIP options

Yes. Monthly and Quarterly SIP

Minimum investment (SIP)

Rs.500 and in multiples of Rs.100 in Monthly.

Rs.1,500 and in multiples of Rs.100 thereafter under Quarterly.

Systematic transaction facilities (STP) available

Yes. subject to completion of lock-in period

Exit Load

Upon completion of the lock-in period of 5 years, the units can be redeemed with an exit load of 1% till the age of 60 for an investor.
After completion of 60 years of age, the investor can redeem the units without any exit load.
Exit load will not be applicable for switches between investment plans and plans/option within the scheme post lock-in period.

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Is exit load applicable for switches within the scheme

No. Exit Load is not applicable for switching between Investment Plans, subject to completion of the lock-in period.

Options for withdrawal of corpus

Lump sum Option, Switch-Option, Systematic Withdrawal Advantage Plan (SWAP) Option & Systematic Transfer Plan (STP).

Scheme be held in dematerialized form

Yes

Listing

Being an open ended Scheme under which Sale and Redemption of Units (subject to completion of Lock-in Period) will be made on continuous basis by the Mutual Fund, the
Units of the Scheme are not proposed to be listed on any stock exchange. However, the Mutual Fund may at its sole discretion list the Units under the Scheme on one or
more stock exchanges at a later date.

Minimum Amount / Units for Redemption (including

Switch-out):

Rs. 500 or a minimum of 50 Units.

Minimum Entry Age

18 Years

Maximum Age

No Limit.
Adult Resident Indian Individuals, either single or jointly (not exceeding three).
Non -resident Indians (NRIs) and Persons of Indian Origin (PIO)/ Overseas Citizen of India (OCI) on repatriation basis or on non-repatriation basis.

Eligibility of the Investor Under the Scheme

The investor having completed 18 years of age is eligible to invest in the Scheme. Age shall be computed with reference to years completed on the date of allotment. The
Trustee reserves the right to alter the age for investment under the Scheme.
Plans

Equity Plan

HybridEquity Plan

HybridDebt Plan

Equity & equity-related instruments

80% - 100%

60%-80%

70%-95%

Debt and Money Market Instruments

0-20%

20%-40%

5%-30%

Nifty 500

CRISIL Balanced Fund Index

CRISIL MIP Blended Index

Rs. 10 crore

Rs. 20 crore

Estimated Asset Allocation:

Benchmark
Total expense ratio (TER)
Minimum Target amount

Upto 3%
Rs. 10 crore

Upto 2.75%

Tax Benefits:

Tax benefits U/s 80C: The investment made by Individuals in the fund is eligible for tax benefits U/s 80C of the Income-tax Act, 1961 for a deduction up to Rs.1.5 Lakh (along with other
prescribed investments u/s 80C) from Gross Total Income. Please note this 80C tax benefit is available in all the three plans.

Long Term Capital Gains Tax on Equity plan & Hybrid Equity Plan: The investments made in the Equity plan & Hybrid Equity Plan will be treated as investments in equity oriented funds and
income earned at the time of redemption on these investments will be treated as long term capital gains which are exempt from income taxes.

Long Term Capital Gains Tax on Hybrid Debt Plan: Any capital gains arising out of the Hybrid Debt Plan at the time of redemption would be taxable as per the applicable tax rates and
indexation benefits thereof. As per the current tax structure, the Long Term Capital Gains Tax on such non-equity oriented funds is levied at 20% with indexation.

In case of investments through SIP route, all the installments are subject to lock-in of 5 years.
Please note only the first unit holder can avail tax benefit under the scheme. Any Joint holder/s can not avail the tax benefit.
Further, the switches between plans of the HDFC Retirement Savings Fund are not eligible for tax benefit under section 80 C.

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Exit Load:
Upon completion of the lock-in period of 5 years, the units can be redeemed with an exit load of 1% till the age of 60 for an investor. After completion of 60 years of age, the investor can redeem the
units without any exit load. In case an investor invests at the age of 58, the minimum lock-in period of 5 years is applicable and the units cannot be redeemed immediately post turning 60.
Exit Load is not applicable for switching between Investment Plans and Plans / Options within the Investment Plans, subject to completion of the lock-in period.
Options for withdrawal of corpus:
Presently, the Options for withdrawal of corpus available to the Unit holders are as follows:

Lump sum Option: In case, the Unit holder wishes to redeem the entire / part of the units accumulated (units outstanding to the credit of Unit holder's folio/beneficiary account), he can
exercise the option by submitting a redemption request. The units would get redeemed at the applicable NAV without any exit load.

Switch-Option: The Unit holder can switch entire / part of units accumulated to any other Investment Plan within the scheme or else switch to any other open-ended schemes of HDFC Mutual
Fund. He can exercise the option by submitting a switch request. Please note that on exercise of switch-option the amount which is switched-out shall be treated as redemption and shall be
subject to Income tax provisions as applicable on such redemption. For Income tax purposes, holding period shall be calculated from the date of investment in respective investment Plans and
not the date of original investment in the Scheme.

Systematic Withdrawal Advantage Plan (SWAP) Option: Unit holders who wish to receive a fixed amount monthly or at pre-specified intervals from the accumulated corpus can opt for this
option. Systematic Withdrawal Plan (SWAP) would enable regular income at periodic intervals of time. Here the Unit holder can avail of the fixed amount at the applicable NAV.

Systematic Transfer Plan (STP): A Unit holder holding units in non-demat form may enroll for the STP and choose to Switch on a daily, weekly, monthly or quarterly basis from this Scheme to
another Scheme of HDFC Mutual Fund, which is available for investment at that time. The provision of "Minimum Redemption Amount" of this Scheme and "Minimum Application Amount" of
the designated Transferee Scheme(s) shall not be applicable to STP.

Fund Managers:
The equity portion will be managed by Mr. Chirag Setalvad. He is B.Sc. in Business Administration - University of North Carolina, Chapel Hill. He has collectively over 19 years of experience, of which 16
years in Fund Management and Equity Research and 3 years in investment banking. He manages other fund such as HDFC Capital Builder Fund, HDFC Mid - Cap Opportunities Fund, HDFC Small & Mid
Cap Fund, HDFC Balanced Fund, HDFC Children's Gift Fund, HDFC Long Term Advantage Fund and HDFC Multiple Yield Fund Plan 2005.
The debt portion will be managed by Mr. Shobhit Mehrotra. He is a B. Text, M.S. MBA Clemson University, SC,USA. He has collectively over 21 years of experience in Fixed Income markets, credit rating
etc. He manages other fund such as HDFC MF Monthly Income Plan (Debt Portfolio), HDFC Income Fund, HDFC High Interest Fund - Short Term Plan, HDFC Floating Rate Income Fund, HDFC Corporate
Debt Opportunities and FMPs.
Similar fund provided by the other AMCs:
There are other 4 mutual fund companies which provide similar retirement plans such as Reliance, Franklin Templeton, UTI and Tata mutual funds. Though all schemes by these AMCs are similar on
most of the aspects, they differ in term of offering sub plans, lock-in period and flexibility of breaking the investment during lock-in period.

RETAIL RESEARCH

The comparison of their basic features are as follows;

AMC

HDFC

Reliance

Franklin
Templeton

UTI

Tata

Name of the Scheme

HDFC
Retirement
Savings Fund
- Equity Plan

HDFC
Retirement
Savings Fund Hybrid Equity
Plan

HDFC
Retirement
Savings Fund Hybrid Debt
Plan

Reliance
Retirement
Fund - Wealth
Creation

Reliance
Retirement
Fund - Income
Generation

Franklin India
Pension Plan

UTI-Retirement Benefit
Pension Fund

Tata
Retirement
Savings Progressive

Tata
Retirement
Savings Moderate

Tata
Retirement
Savings Conservative

Nature of the Scheme

An Open-end
Tax Saving
Fund

An Open-end
Tax Saving
Fund

An Open-end
Tax Saving Fund

An Open-end
Tax Saving Fund

An Open-end
Tax Saving Fund

An Open-end
Tax Saving Fund

open ended notified tax

savings

Open ended
fund

Open ended
fund

Open ended
fund

Nature of the Portfolio

Pure Equity
Oriented

Hybrid - Equity
Oriented

Hybrid - Debt
Oriented

Pure Equity
Oriented

Hybrid - Debt
Oriented

Hybrid - Debt
Oriented

Hybrid - Debt Oriented

Pure Equity
Oriented

Hybrid Equity
Oriented

Hybrid - Debt
Oriented

3 full financial
years.

Yes. 3 years. However,

investors may withdraw
anytime even during the
lock in period (subject to
the exit load)

No

No

No

Yes. subject to
a maximum of
Rs. 1,50,000/under Section
80 C of Income
Tax Act,
1961

Yes. subject to a
maximum of Rs.
1,50,000/- under
Section 80 C of
Income Tax Act,
1961

Yes. Subject to a maximum

of Rs. 1,50,000/- under
Section 80 C of Income Tax
Act,1961. In case if the
investors redeems his
units before three years
from the date of
allotment, the tax benefit
under sec 80c will be
reversed.

No tax
benefit under
80c

No tax
benefit under
80c

No tax benefit
under 80c

1% if redeemed/switched out from

Reliance Retirement Fund before
attainment of 60 years of age. Nil
in case of Auto
SWP/Redemption/Switch out from
Reliance Retirement Fund on or
after attainment of 60 years of age
or after completion of 5 year lock
in period, whichever is later

(subject to
completion of
the lock-in
period and
minimum target
investment)
3% if redeemed
before the age
of 58 years; Nil if
redeemed after
the age of 58
years.

5% if redeemed less than

one year from the date of
allotment, 3% if redeemed
between 1 to 3 years, 1% if
redeemed after 3 years.
Nil if redeemed at maturity
(i.e. 58 years of age) or
after 5 years from
the date of investment
whichever is later. No exit
load, in the case of the
death of an unitholder.

Nil - If redeemed after attainment of retirement

age i.e. 60 years of age.
In case of Auto switch-out of units on occurrence
of Auto-switch trigger event Nil.
For Redemption of units before the attainment of
retirement age i.e 60 years: 3% - If redeemed /
Switched out on or before expiry of 3 Years from
the date of allotment. 1% - If redeemed /
Switched out after 3 Years from the date of
allotment.

Lock-in Period

Tax Benefit under Section 80 C

Exit Load

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5 years

Yes. subject
to a maximum
of Rs.
1,50,000/under Section
80 C of
Income Tax
Act,
1961

5 years

Yes. subject to
a maximum of
Rs. 1,50,000/under Section
80 C of Income
Tax Act,
1961

5 years

Yes. subject to
a maximum of
Rs. 1,50,000/under Section
80 C of Income
Tax Act,
1961

Upon completion of the lock-in period of 5 years, the

units can be redeemed with an exit load of 1% till
the age of 60 for an investor. After completion of 60
years of age, the investor can redeem the units
without any exit load

5 years

Yes. subject to
a maximum of
Rs. 1,50,000/under Section
80 C of Income
Tax Act,
1961

5 years

Liquidity

completion of 5 years lock in period

completion of 5
years lock in
period

completion of 5
years lock in
period

Subject to
completion of
the lock-in
period and
minimum target
investment
40% of CNX 500
+ 60% of Crisil
Composite Bond
Fund Index

CRISIL Debt Hybrid (60:40)

S& P BSE
SENSEX

CRISIL
Balanced
Fund Index

CRSIL MIP
Blended Index

Yes. Any business day

(subject to the exit load)

Yes. Any
business day
(subject to
the exit load)

Yes. Any
business day
(subject to
the exit load)

Yes. Any
business day
(subject to the
exit load)

Nifty 500
Index

CRISIL Balanced
Fund Index

CRISIL MIP
Blended Index

S&P BSE 100

Crisil MIP
Blended

Asset Allocation into Equity (As

per the SID)

80% - 100%

60% - 80%

5% - 30%

65% to 100%

5% to 30%

Up to 40%

Up to 40%

85% to 100%

65% to 85%

0 to 30%

Asset Allocation into Equity (As

per latest portfolio)

95%

18%

40%

40%

94%

71%

29%

Largecap & Midcap allocation

Ratio in equity portion ( as per
latest portfolio)

80:20

79:21

88:12

68:32

73:27

69:31

74:26

NA

NA

up to 60 years

in the age group of 18 to

65 years

Any time

Rs. 5,000 / SIP monthly Rs. 500

Rs.10,000 / SIP
Rs. 500

Rs.10,000 / (Rs. 500

Subject to attaining a
minimum investment of
Rs. 10,000/- by the age of
52 years)

Rs. 5,000/- and in multiples of Re. 1/- thereafter

after completion of 5 year lock in

period

On attaining 58
years of age
(subject to
completion of
lock-in period of
3 FY) and The
total investment
made is at least
Rs.10000/-, the
investor (i.e.
you) can avail
any of the
following
options: Pension
Option, Lump
sum Option,
Combination

Unitholders who have

made investments upto
the age of 52 years may
get the regular periodical
payments after they
complete 58 years.
Unitholders who make
investments between the
age of 53 and 65 years can
redeem it after 5 years
from the date of each such
investment.

Benchmark

Eligible Entry Age

Minimum investing Amount

Redemption

RETAIL RESEARCH

18 years

Rs. 5,000 / SIP monthly Rs. 500

after completion of 5 year lock in period

NA

NA

NA

Option, Flexible
Option,

Minimum amount for

redemption

Option & Periodicity to receive

the redemption proceeds

Any amount or any number of

units

Rs.1,000/- and
any amount in
multiple of
Re.1/thereafter

Rs. 1,000/- and multiples

of Rs.100/-

Lump sum Option, Switch-Option, Systematic

Withdrawal Advantage Plan (SWAP) Option &
Systematic Transfer Plan (STP).

Auto SWP Facility (monthly or a

quarterly or annual frequency),
SWP

Redemption
benefits can be
availed any of
the following
options: Pension
Option, Lump
sum Option,
Combination
Option, Flexible
Option,

Upon reaching the

eligibility age, the
unitholders will get at any
intervals such as monthly,
quarterly, half-yearly or
yearly

Only Growth

Growth Option & Bonus Option

and Dividend Plan : Dividend
Payout Option

Growth,
Dividend, Div Reinvestment
and Div - Payout
Option.

Only Growth

Only Growth

Only Growth

Only Growth

Rs. 500 or a minimum of 50 Units.

Options

minimum of Rs. 500/- / 50 units or in multiples of

Re.1/- thereafter or for all the Units

Relative performance of the retirement funds in the Indian mutual fund industry:

Benchmark

Latest
Corpus
(Rs Crs)

Expense
Ratio
(%)

Reliance Retirement Fund-Wealth Creation (G)

S&P BSE 100

294

Tata Retirement Savings Fund - Progressive (G)

S&P BSE Sensex

112

Crisil Balanced Fund Index

Scheme Name

Portfolio Asset
Allocation (%)

Market cap break up (%)

(Equity)

Trailing Returns (%)

Mid
Cap
(%)

Small
Cap
(%)

6
Months
Absolute

1
Year
CAGR

3
Years
CAGR

5
Years
CAGR

7
Years
CAGR

Standard
Deviation
(Daily)

Equity
(%)

Debt
(%)

Cash
(%)

Large
Cap
(%)

2.54

94.79

0.68

4.53

80.16

18.37

1.47

-13.08

3.13

93.99

6.03

72.82

27.18

0.00

-10.02

-8.66

13.68

1.03

41

3.13

70.59

12.30

17.11

69.49

30.51

0.00

-8.46

-5.14

17.17

0.79

-1.25

11.93

Equity Diversified
1.04

Balanced - Equity
Tata Retirement Savings Fund - Moderate (G)
Balanced - Debt
Franklin India Pension Plan - (G)

Crisil Compo Bond, Nif500

345

2.48

40.03

57.00

2.96

88.43

11.57

0.00

-3.66

Reliance Retirement Fund-Income Generation (G)

Crisil MIP Blended Index

67

2.37

18.36

67.13

14.51

78.92

18.96

2.12

-1.48

Tata Retirement Savings Fund - Conservative (G)

Crisil MIP Blended Index

82

1.93

29.14

66.73

4.15

74.47

25.53

0.00

-1.92

1.17

9.75

UTI-Retirement Benefit Pension Plan

Crisil Debt Hybrid (60:40)

1637

2.27

39.77

54.32

5.91

67.77

30.52

1.70

-3.67

-1.53

8.99

Benchmark:

RETAIL RESEARCH

11.06

12.98

0.46
0.28
0.30

8.28

11.02

0.42

Nifty 500

-13.51

-13.6

8.87

6.83

16.29

S&P BSE 100

-14.12

-15.9

7.04

5.96

15.63

S&P BSE Sensex

-14.06

-16.5

6.97

5.59

14.92

Crisil Balanced Fund Index

-7.86

-8.26

7.86

7.16

12.78

Crisil Composite Bond Fund Index

3.86

7.04

8.54

8.61

7.42

Crisil Debt Hybrid (60:40)

-3.48

-1.94

8.55

8.05

11.13

Crisil MIP Blended Index

1.08

3.40

8.47

8.38

8.79

Note: NAV value as on Feb 03, 2016. Portfolio data as on Dec 2015.

What is the need for retirement planning?

The need for retirement planning is detailed below:

Longer life-spans mean longer retirement.

Joint families giving way to nuclear families.
Lack of social security benefits in India.
To maintain the standard of living post retirement with a plan to tackle the unforeseen expenses.
Income streams may dry up.
Safeguard against inflation.

Why should one invest in HDFC Retirement Savings Fund?

HDFC Retirement Savings Fund addresses the need of retirement planning. The benefits of investing in the fund are detailed below:

Long-term investment vehicle targeting retirement corpus for the investors.

Asset allocation is important as each asset class has a different return-risk-liquidity profile. HDFC Retirement Savings Fund offers three different plans to suit investors of different age groups
and risk profiles.
Investments in the Scheme qualify for tax benefits U/s 80C of the Income-tax, 1961.
Expertise of HDFC AMC with over 15 years of fund management experience.

Analyst: Dhuraivel (e-mail: Dhuraivel.gunasekaran@hdfcsec.com)

RETAIL RESEARCH Tel: (022) 3075 3400 Fax: (022) 2496 5066 Corporate Office
HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Website: www.hdfcsec.com Email:
hdfcsecretailresearch@hdfcsec.com
Disclaimer: Mutual Funds and Debt investments are subject to risk. Past performance is no guarantee for future performance This document has been prepared by HDFC Securities Limited and is meant for sole use by the recipient and not for circulation. This document is not to be
reported or copied or made available to others. It should not be considered to be taken as an offer to sell or a solicitation to buy any security. The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied
upon as such. We may have from time to time positions or options on, and buy and sell securities referred to herein. We may from time to time solicit from, or perform investment banking, or other services for, any company mentioned in this document. This report is intended for nonInstitutional Clients
This report has been prepared by the Retail Research team of HDFC Securities Ltd. The views, opinions, estimates, ratings, target price, entry prices and/or other parameters mentioned in this document may or may not match or may be contrary with those of the other Research teams
(Institutional, PCG) of HDFC Securities Ltd. HDFC Securities Ltd. is a SEBI Registered Research Analyst having registration no. INH000002475."

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