Your goal has a deadline. Should your mutual fund have one? AMFI data shows life-cycle funds are still a niche category
Life-cycle mutual funds are designed to align investments with specific financial goals and timelines
The two schemes fall into the 10-year and 15-year maturity categories
For investors saving towards a defined financial goal, reaching the target is only part of the challenge. The other is managing the portfolio as the deadline approaches. Life-cycle funds are built around this idea, with the asset allocation changing over time as the fund moves towards its maturity.
Yet, despite the concept, the category remains small in India. According to data from the Association of Mutual Funds in India (AMFI), there were just two life-cycle fund schemes as of August 31, 2026. Together, they had 13,610 folios and assets under management of Rs 38.07 crore. During August, the category mobilised Rs 8.01 crore and saw repurchases or redemptions of Rs 0.13 crore, resulting in a net inflow of Rs 7.87 crore.
The two schemes fall into the 10-year and 15-year maturity categories. There were no schemes in the 5-year, 20-year, 25-year or 30-year maturity categories.
The 10-year life-cycle fund had 7,415 folios and AUM of Rs 19.76 crore at the end of August. It mobilised Rs 4.42 crore during the month and recorded Rs 0.07 crore in repurchases, resulting in a net inflow of Rs 4.34 crore. The 15-year fund had 6,195 folios and AUM of Rs 18.31 crore. It mobilised Rs 3.59 crore and recorded Rs 0.06 crore in repurchases, resulting in a net inflow of Rs 3.53 crore.
A Life Cycle Fund is an open-ended, goal-based investment solution designed for investors with a defined financial goal and a specific investment horizon.
“The fund follows a predefined glide path, under which the portfolio’s asset allocation changes systematically as the fund moves towards its maturity year,” said Manish Banthia, CIO – Fixed Income, ICICI Pru AMC.
The allocation is structured to change over the life of the fund. When the goal is distant, the fund has a higher allocation to equity. As the goal approaches, equity exposure is gradually reduced and debt allocation increases, helping manage the portfolio risk associated with market volatility closer to the goal.
The mechanism can be illustrated through a long-term goal such as funding a child’s higher education.
“Suppose an investor is planning for a child’s higher education in 2041. Since the goal is 15 years away, the portfolio can afford to have a relatively higher equity allocation today to participate in long-term growth. But as 2041 comes closer, the investor cannot afford a sharp equity-market correction just before the money is required. A life-cycle fund addresses this by gradually reducing equity exposure and increasing allocation to relatively more stable assets such as debt,” said Ajay Kumar Yadav, CFPCM, Group CEO & CIO, Wise Finserv.
The glide path is therefore central to how these funds are structured. Instead of leaving the investor to periodically decide how the equity-debt mix should change, the asset allocation is predetermined based on the time remaining until the fund’s maturity.
SEBI has allowed life-cycle funds with maturities ranging from 5 years to 30 years, in multiples of five years. Depending on the period remaining to maturity, these funds can invest across equity, debt and limited allocations to assets such as gold, silver, commodity derivatives and InvITs.
“The real advantage is behavioural as much as financial. Most investors understand that they should reduce risk as a financial goal approaches, but in practice, rebalancing either gets delayed or does not happen at all. Life-cycle funds try to automate this discipline,” said Yadav.
An emerging category
The latest AMFI numbers put the size of the category in perspective. The broader mutual fund industry had 1,985 schemes and Rs 87.08 lakh crore in assets across open-ended, close-ended and interval schemes at the end of August. Against this, the two life-cycle funds together accounted for Rs 38.07 crore in AUM.
Life-cycle funds are still a relatively new category for Indian mutual fund investors, with five AMCs including Zerodha, ICICI Prudential, Nippon India, Mirae Asset and The Wealth Company having entered the space through launches, NFOs or filings with SEBI.
“Life-cycle funds are still an emerging category in India, but interest among asset management companies is growing as investors increasingly look for goal-oriented and long-term investment solutions,” said Vedant Gupte, Co-Founder and CEO of investment platform Trackk.
Who should consider them?
The funds are primarily designed for investors with a clearly defined financial goal and a specific time horizon. These could include retirement, children’s education or another future financial milestone.
“They can be useful for investors who want the benefits of asset allocation but may not have the time, expertise or discipline to regularly review and rebalance their portfolio,” said Gupte.
“For example, an investor may be planning for a financial goal like buying a car, a house, destination wedding, child’s education, or retirement or any another financial objective that is expected around a particular timeframe. In such an instance, the investor can choose a Life Cycle Fund whose maturity broadly aligns with that goal,” said Banthia.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.