Want to retire rich? These mutual funds are delivering up to 30% returns

AUM of Retirement mutual funds surge by 226.25% over last five years to touch Rs 31,973 crore in June 2025

As life expectancy rises and traditional family support systems evolve, Indians are waking up to the critical importance of retirement planning—and mutual funds are emerging as a preferred vehicle. According to ICRA Analytics, the Assets Under Management (AUM) of retirement mutual funds have surged by 226.25% in just five years, reaching ₹31,973 crore in June 2025 from ₹9,800 crore in June 2020.

This remarkable growth has been powered by increased investor awareness, enhanced digital access, and greater transparency in financial products.

Why Retirement Mutual Funds Are Gaining Traction

A retirement mutual fund is a specialised solution-oriented mutual fund whose objective is to ensure that the investor has a comfortable and secured post-retirement life. Such funds have exposure to both equity and debt where the equity segment fosters wealth appreciation while the debt segment ensures wealth preservation and stability. A retirement mutual fund helps provide a regular stream of income when one retires and there is no regular monthly income and come with a lock in period of 5 years or till retirement.

 

“Enhanced transparency and investor protection regulations have boosted investor confidence in mutual funds as a retirement vehicle,” said Ashwini Kumar, Senior VP, ICRA Analytics.

From just 25.46 lakh folios in June 2020, the number of retirement fund investors has gone up to 30.09 lakh in June 2025—a clear sign of increasing retail interest. Additionally, the number of such schemes has risen from 24 to 29 over the same period.

These funds have delivered robust returns despite market volatility:

 

1-Year CAGR: 6.79%

 

3-Year CAGR: 15.72%

 

5-Year CAGR: 14.64%

 

Top performers include ICICI Prudential Retirement Fund – Pure Equity Plan (30.32% over 5 years) and HDFC Retirement Savings Fund – Equity Plan (27.46%)

Source: MFI360Explorer

 

What Should Investors Do?

Planning for retirement shouldn’t be delayed. The earlier one starts, the better the power of compounding works in their favour. With inflation, healthcare expenses, and lifestyle costs on the rise, a thoughtfully chosen retirement mutual fund can provide both growth and peace of mind. 

Top 10 performing Retirement Mutual Funds 

Returns as on March 31, 2025; Top 10 sorted based on 5-year CAGR

Less than 1 year Absolute returns, Greater than or Equal to 1 year Compound Annualized returns