With rising life expectancy and inflation, building a reliable retirement corpus early is the only way to secure financial freedom later in life. Among the many tools available, retirement mutual funds have emerged as a simple and market-linked way to accumulate wealth over the long term.
One fund that has stood out recently in this space is ICICI Prudential Retirement Fund – Pure Equity – Direct Plan.
According to performance data sourced from the Financial Express mutual funds screener, this scheme is currently the best performer among retirement funds across 1-year, 3-year and 5-year periods.
Here are the fund’s annualised returns across 1, 3 and 5-year periods
1-year return: 9.94%
3-year return: 24.62% (annualised)
5-year return: 26.43% (annualised)
This consistency highlights its ability to generate long-term wealth through disciplined equity investing.
What makes this fund attractive?
This plan is an open-ended equity-oriented retirement fund, launched on February 7, 2019 under the ICICI Prudential Mutual Fund umbrella.
Since inception, it has delivered a robust 21.56% return, highlighting its potential to build wealth meaningfully over time. It features a very high risk profile, meaning investors must be comfortable with market-linked ups and downs—typical of long-term equity investing.
The fund tracks the Nifty 500 Total Return Index, a broad-based benchmark capturing India’s diversified equity universe.
With more than 90% allocation to equities, it ensures aggressive participation in market growth, making it suitable for long-term retirement accumulation.
The fund’s expense ratio of 0.68% is among the lowest in the retirement category, ranking as the fourth lowest. Lower cost structures ensure more gains eventually reflect in investor returns—an important advantage for long-term compounding.
Its size is healthy too, with an AUM of Rs 1,516 crore, and it carries no exit load, offering flexibility if investors need liquidity. The minimum investment amount stands at Rs 5,000, making it accessible for new retirement savers.
Where does the fund invest?
Its portfolio indicates well-spread exposure across sectors:
Finance – 14.2%
Chemicals – 10.4%
Iron & Steel – 6.4%
IT – 5.8%
Others – 63.2%
(Data: Financial Express Mutual Funds screener)
This diversification helps navigate market cycles better. Retirement fund mandates also typically require long-term lock-ins and encourage disciplined investing—aligning perfectly with wealth accumulation goals.
Why retirement mutual funds matter
According to Value Research and industry reports, retirement mutual funds are specially designed for long-term investing. Their key features include:
-Lock-in structures that promote disciplined, goal-linked investment
-Market-linked returns that offer inflation-beating potential
-Tax efficiency, especially when invested for the long term
-Professional fund management that takes over asset allocation decisions
Unlike traditional retirement options where returns are broadly fixed, mutual funds allow savers to participate in market growth—making them powerful wealth creators if held for long durations.
How do they compare with other retirement schemes in India?
India offers multiple retirement-oriented products:
Employees’ Provident Fund (EPF) – Mandatory for salaried individuals, offering steady interest accrual.
Public Provident Fund (PPF) – A long-term small savings scheme with tax-free maturity.
National Pension System (NPS) – A government-backed retirement market-linked plan with tax benefits and annuity features.
Insurance-based pension plans – Provide guaranteed income but can be costlier.
While these alternatives offer safety or tax advantages, retirement mutual funds generally:
-Provide higher wealth creation potential over long periods
-Offer complete freedom on withdrawals (beyond lock-in norms)
-Allow transparent portfolio tracking, unlike packaged pension products
-Give flexibility to choose equity or hybrid risk levels
This combination of transparency, growth potential and cost efficiency gives retirement mutual funds a natural edge for investors aiming at aggressive long-term compounding.
Disclaimer: The above content is for informational purposes only. Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing.