These 4 mutual fund types are a must for retirees, as per Value Research

As market volatility tests retirement portfolios, research suggests that senior citizens may be better served by predictability over aggressive return-chasing.

A recent note by Value Research said retirees should prioritise stability and reasonable returns over high-risk strategies, especially with a three- to five-year investment horizon. The research firm examined mutual fund categories that have historically delivered moderate growth with fewer unpleasant surprises.

Instead of focusing on peak returns, the study evaluated how an average fund in select categories performed across every possible three- and five-year holding period since 2013. The aim was to identify segments that consistently combined stability with reasonable upside.
Based on that analysis, Value Research identified four mutual fund categories that could form the core of a retiree’s portfolio.

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Short duration funds

These debt funds invest in bonds with shorter maturities, which typically reduces sensitivity to interest rate swings. According to the note, the category has historically delivered relatively steady returns over three- to five-year periods, making it suitable for investors seeking income stability.

Conservative hybrid funds

Conservative hybrid funds allocate a larger portion to debt while maintaining a modest exposure to equities. The research note said this structure helps cushion volatility while allowing limited participation in equity market gains. Over rolling three- and five-year periods since 2013, the category has shown a balance between downside control and moderate growth.

Large cap funds

For retirees who need some equity exposure to counter inflation, large cap funds can offer relatively lower volatility compared with mid- and small-cap peers. Value Research said large cap funds, on average, have delivered more predictable outcomes over longer holding periods, though they remain subject to market fluctuations.

Equity savings funds

Equity savings funds combine equity, arbitrage and debt strategies. The category seeks to limit downside risk while generating tax-efficient returns. The note found that, across multiple rolling periods, equity savings funds have typically avoided sharp drawdowns seen in pure equity categories.

Value Research emphasised that no category is entirely risk-free. However, its rolling return analysis suggests these four segments have historically reduced the chances of extreme disappointments while still offering moderate growth.

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