Solution oriented mutual funds are illiquid funds with a lock-in period of 5-years and suitable for investors who have a longer time horizon with a specific objective in mind. Investors also enjoy some tax saving benefits when they buy into these funds.

According to Vineet Nanda, MD of Sift Capital, solution oriented funds are customised to meet specific financial goals of the client. He added that in India there are two types of solution oriented funds — children’s saving fund and retirement fund.

“Solution oriented funds are customised to meet specific financial goals which the clients may have. In India as of now we have broadly funds which are in the children’s saving and retirement category. The children’s savings funds can be looked at for the child’s marriage, education. Whereas the retirement funds are to take care of your regular income requirements once you superannuate from your job or from your business you decide to take it easy and live a more passive lifestyle,” Nanda said.

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(Edited by : Pradeep John)